Can Joint Property and Bank Accounts With My Mother Be Attached to Pay Nursing Home Bills?

Full question:

If my brother and I are named as co-owners along with my 80 year old Mother on all bank accounts (cash around $200,000) and property deeds (property $600,000 4 in Pa, 2 in Fl no mortgages on anything). What can be taken if our Mother goes in a nursing home?

• Category: Medicaid
• Date: 04/07/2025
• State: Pennsylvania

Answer:

Judgments can be executed against joint accounts with the exception of accounts held by a married couple as tenancy by the entirety when the debt is te sole debt of one spouse. The usual procedure is for the account to be frozen and the non-debtor account holder filing a motion with the court to have the portion of funds belonging to them released. The safest course of action if the debtor believes he or she may be sued, is to remove themselves from the account to avoid the joint holder being penalized. If the debtor has already received a civil summons or a judgment has already been awarded, then it is generally too late to prevent attachment by the judgment creditor.

Before you qualify for the government nursing home assistance program, there is a 60 month look back to see if and when you transferred your assets for less than fair cash value or you transferred your assets into a trust system or any system of transferring your wealth for the purpose of becoming eligible for the nursing home program depriving the state of all your available resources for your long-term health care.

Transferring, giving away or selling resources for less than fair market value is called a "disposal of resources". Under the Deficit Reduction act of 2005, the look back period (five years rather than three) will apply to transfers made on or after February 8, 2006. For every $4300 disposed of you will be disqualified for one month of Medical Assistance coverage of your nursing home care.

The penalty period for transfers made on or after February 8, 2006, starts on the later of: the first day of the month after which assets are transferred for less than fair market value, or the date on which you are eligible for Medical Assistance—Long Term Care. The change from 3 years to 5 will be phased in so that, for example, if you apply for Medical Assistance in March, 2009, the look-back period will be three years and one month. As of February, 2011, the full look-back period of five years will be fully in effect. If you give away property or money on more than one occasion, the second penalty does not begin to run until the end of the first one. The length of the disqualification depends on the value of the resources transferred.

Transferring a house to the following people does not affect eligibility for Medicaid:

-A spouse

-A child under the age of twenty-one or a child who is certified blind or certified disabled at any age

-A sibling with an equity interest in the home who has resided in the home at least one year immediately prior to the date the patient became institutionalized and continues to lawfully reside in the home

-A caretaker child who has resided in the home for at least two years immediately prior to the date the patient became institutionalized and who provided care.

If a person's equity interest in the home is $500,000 or less (or $750,000 or less in some cases) and the person intends on returning home, it will not be considered as a resource in determining eligibility for Medicaid. The equity value is derived by subtracting encumbrances such as liens and mortgages from the fair market value. Reverse mortgages and home equity loans can be used to reduce the equity interest.

Creating a life estate without the power to sell the house is a disposal of a resource that may disqualify you from Medical Assistance. If a life estate deed without the power to sell was created long enough ago that there is no penalty, the house is a countable resource, but your life estate without the power to sell has a market value of $0, so it would not disqualify you from Medical Assistance. The purchase of a life estate will be included in the definition of "assets" unless the purchaser resides in the home for at least one year after the date of purchase.

Creating a life estate deed with the power to sell the house is not a disposal, because you still have the power to sell the house at any time without anyone else's permission. However, the house could not be an exempt resource based only on your saying you intend to return home, because the State cannot put a lien on a house owned this way. The market value of the house would be counted as an available resource. If the house would be exempt for other reasons, such as because your spouse or a dependent relative lives in it, then it still would be exempt.

The elements of a fraudulent conveyance transfer are defined as follows by the Uniform Fraudulent Transfer Act:

(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or

(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or

(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.