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The Heritage Law Center, LLC Blog

Comingling Bank Accounts with Elderly Parents

POSTED ON: March 31, 2011

Recently, a client came to me seeking emergency MassHealth planning assistance after her father’s health rapidly declined and he was admitted to a long-term care facility. This client was obviously very close with her parents and had spent much time and energy over the years trying to help them maintain their finances. Unfortunately, as is often the case, this person had received a lot of conflicting advice from friends and family about how this should be done. To help her parents manage their money, she had her name added to her their bank accounts. She also put her parents’ names on her personal accounts because, as a single person, she wanted to be sure her parents would have access to her money in case anything ever happened to her. While this might seems like a logical thing to do, comingling bank accounts with your parents can have very negative consequences on their ability to qualify for MassHealth care benefits.

According to the MassHealth eligibility rules, all funds held in accounts in an applicant’s name, whether solely or with another person, will be presumed to be countable assets and will disqualify them from receiving MassHealth benefits if they total more than the $2,000 asset limit set for MassHealth recipients. This presumption is rebuttable, however, meaning that if the funds in the account actually belong to the other account holder they will need to provide evidence of this in order to prevent them from being attributed to the MassHealth applicant.

Often married couples will have accounts with both spouses named on them. This is generally not a major problem because MassHealth allows transfers of funds between spouses and the spouse still living in the community is allowed to keep roughly $109,000 in assets. One of the first things I usually have couples do when one of them needs to qualify for MassHealth is to transfer all joint bank accounts into the name of the healthy spouse only. This protects them from being counted against the MassHealth applicant.

While shifting accounts between spouses may only amount to some annoying paperwork, the real problem is when the applicant’s child is added to the account or adds the applicant to their accounts. In this case, the child will need to provide concrete proof that all of the funds in their account are theirs only, and that their parents were only added to the account as a convenience. Occasionally, MassHealth will look at these accounts with more scrutiny because of the possibility of improper transfers between the parents and their children.

A more sensible approach to helping manage your parents’ accounts is to have a Durable Power of Attorney drafted that will allow you access to their accounts. This power can be drafted so that it is immediately effective to handle day-to-day finances or so that it only becomes effective if the account holder becomes incapacitated. If you wanted your parents to have access to your accounts you could have a similar document drafted for yourself. This way, everyone is able to help out in times of need while keeping the bank accounts clearly separated. Your parents will thank you and you will avoid some costly headaches should they ever need to qualify for MassHealth.