What Are Potential Dangers of Joint Accounts?
Many use joint accounts as a way to avoid probate and transfer money to loved ones. Joint accounts can be useful in certain circumstances, but they can also have negative consequences if not used properly.
Adding a loved one to a bank account can expose the account to creditors of the other individual.
Joint accounts can also affect Medicaid planning.
Why?
Money deposited in a joint account belongs to both account holders equally. Creditors don’t care who deposited the money.
When one of the account holder dies, the money in the account automatically goes to the other account holder. Although you may avoid probate, you may now be disqualified from any benefits you have or applying for.
Additionally, when it comes to Medicaid Planning, any transfer of assets out of the account, or a joint owner is removed from a bank account, can be considered an improper transfer of assets for Medicaid purposes.
One common mistake we see families make, is a spouse enters a nursing home and the family removes his or her name from the joint bank account. This will be considered an improper transfer of assets.