Problem No. 2 – Needs-Based Benefits Eligibility
Putting a child on the deed to a home (as a joint tenant) may result in
a non-exempt transfer of a resource. Non-exempt transfers may result in
a penalty period being tacked on for determining eligibility for Medicaid.
Bottom line, these rules are very complicated and should be discussed
with an Estate Planning attorney who is well-versed in planning for needs-based
benefits such as Medicaid, and SSI.
Problem No. 3 – Undermining the Estate Plan
Many people think of probate avoidance when they think of holding property
jointly, but many forget that the joint holder will not have to abide
by the terms of the rest of their Estate Plan when it comes to distributions.
Jointly held property (with rights of survivorship) passes directly to
the joint owner, and is not subject to the terms regarding distributions
in the Will or Trust of the deceased owner. This can result in unintentional
disinheritance of other children/loved ones.
The immediate assumption by some of my clients is that the child on the
account or deed can just give the other children a portion after the parent
dies (although this may not necessarily be a realistic outcome). Aside
from the practical drawbacks of this kind of assumption-based planning,
there may be unintended gift tax consequences imposed on the donor child
in such a scenario.
As you can see, holding property jointly can produce some unfortunate consequences.
That being stated, holding property jointly can also be a useful planning
tool in the context of your entire Estate Plan. If you would like to explore
this topic further, please give us a call at (203) 651-5521 or use our
online contact form