Many people believe that adding someone's name to your bank account can be an effective strategy for protection of assets when attempting to qualify for Colorado Medicaid. This is actually not the case, however. Consider the following situation:

Mrs. Jones' husband was diagnosed with Alzheimer's Disease three years ago and the disease has progressed to the point where he needs long-term nursing home care.

At the time of the diagnosis, she talked to some friends of the family who told her to go ahead and add the kids names to her bank accounts and mutual funds as a way to protect those assets from Medicaid. Now that her husband is in the nursing home she wonders
whether she did the right thing.

Adding someone else's name to a bank account or mutual fund does NOT transfer the ownership on that account. If Mrs. Jones had a bank account with $20,000 and she added her daughter's name to the account, the state would say that her daughter's name was added for convenience purposes only. In other words, the entire account still belongs to Mrs. Jones. So even though the child's name has been added, the practical effect, from a Colorado Medicaid standpoint, is that there has been no gift and the entire account still belongs to Mrs. Jones.

This is true whether we are talking about bank accounts, certificates of deposit, savings bonds, mutual funds or any other liquid asset. The law says there is no gift until the child actually takes the money out of the account. In other words, using this same example, if Mrs. Jones added her daughter's name to the account three years ago, there has been no gift made. If her daughter later takes some money out of the account and moves it into her own name, then the gift is made at the time the daughter takes the money out of the account.

This general rule is not true where real estate is concerned. That's because if someone's name is added to real estate, at the time the deed is signed and recorded, then a completed gift has been made.

Whether or not it makes sense to add someone's name to real estate or financial assets depends upon the facts and circumstances of each particular case, and laws can vary from state to state. Be sure to seek the advice of a competent professional before proceeding.