Many individuals believe that adding a family member or loved one on a bank account will assist in protecting assets from Medicaid. However, unfortunately, this is untrue. However, adding a person as co-owner of a bank account will assist in avoiding probate.
Probate is the process in Surrogates Court where a Last Will and Testament is proved and accepted, and an executor is appointed, and all assets are distributed to the intended recipients as stated in the Will. Joint assets with a right of survivorship, life insurance policies or other assets that name a beneficiary are not probated. The probate process includes paying estate taxes, debts, taxes and administrative costs, as well as distributing assets to the intended beneficiaries.
As part of the probate process, all of the decedent’s heirs will be notified of the proceeding and must consent to the probate of the Will before any assets can be distributed to the intended beneficiaries. If a loved one does not consent to the probate of the Will, it can cause expensive delays. With that being said, avoiding probate is important, especially if a person is disinheriting a child or spouse. However, in most situations, probate is not an issue.
Furthermore, while a family member or loved one may be named as a beneficiary on a bank account, this concept does not work when it comes to real property. Real property may not be retitled to reflect a family member or loved one’s name in order to avoid probate. With that being said, often the most important part of estate planning is protecting real property for the purpose of qualifying for Medicaid. Placing assets in an irrevocable trust will assist in preserving resources.
The irrevocable trust must designate a trustee and be an income only trust. This will allow an elderly person to collect the interest on the trust, which protects Medicaid from recovering compensation. In addition, transferring property into an irrevocable trust will still allow a person to receive any tax benefits he or she would have ordinarily been entitled to receive. In addition, placing bank accounts in a trust provides additional benefits such as protecting resources from creditors or a change in life events than simply naming a co-owner on a bank account.
If you or someone you love is looking to qualify for Medicaid it is beneficial to seek the guidance of an experienced New Jersey Medicaid lawyer who can guide you through the process. The experienced Medicaid planning lawyers at the Law Offices of Hunziker, Jones, & Sweeney assist New Jersey residents with eligibility and applications for Medicaid. Our New Jersey Medicaid planning lawyers can help you plan ahead for Medicaid and advise you how best to protect and distribute your assets. For more information or to schedule a consultation, contact our New Jersey Medicaid planning lawyers at (973) 256-0456.