Who “Owns” Funds in Joint Accounts — and Why Might It Matter for Medicaid Purposes?

Sometimes “small” cases reveal larger problems. A recent appellate case in Pennsylvania is a reminder of how practical solutions, such as establishing a joint bank account to facilitate management of money or to permit sharing of resources during early stages of elder care, may have unforeseen legal implications later. In Toney v. Dept. of Human Services, decided August 25, 2015, the Commonwealth Court of Pennsylvania ruled that “half” of funds held in a joint savings account under the names of the father and his son, were available resources for the 93-year-old father.  Thus the father, who moved into a nursing home in May 2014, was not immediately eligible for Medicaid funding. 

The son argued, however, that most of the money in the account was the son’s money, proceeds of the sale of his own home when he moved out of state almost ten years earlier:

“The son alleged that his father used the bulk of that money to maintain himself, with the understanding that any money remaining from that CD after his father’s death would revert to him. The ALJ, however, rejected the son’s testimony as self-serving and not credible….”

Apparent failure to introduce documentary evidence at the original hearing about the source of the funds in the account, to demonstrate that specific sums could be traced from the son’s sale of his home, was certainly a problem for the son on appeal.  (Were records available about source and transfer of funds some 10 years after the sale? That could be part of the proof problem).  In ruling against the son, the Commonwealth appellate court focused almost entirely on state law governing Medicaid applications in determining ownership of the funds in question:

Regarding ownership, the ALJ properly rejected the argument below that DHS did not have a right to presume that the joint accounts were available to [the father].  Regarding the rebuttable presumption at issue, DHS’s regulation provides:

    “(e) The following rebuttable presumptions apply in determining the availability of both real and personal property resources:…

        (3) If ownership is shared by persons who are applicants/recipients and a person who is not an applicant/recipient and if the applicants/recipients have a separate legal interest which can be disposed of without the consent of the other owners, the applicants’/recipients’ share of the resource is presumed available. 55 Pa. Code Section 178.4(3)(3).

This case demonstrates that a “presumption” about ownership of funds held in a joint account exists under the state’s Medical Assistance regulation.

Further, “if it cannot be determined how much each owner contributed to a particular account, then each owner owns an equal share” according to the Court’s analysis, citing federal Medicaid regulations at 20 CFR Section 416.1208(c), and Pennsylvania’s Long Term Care Handbook (Chapter 440.2).  Actually, the CFR section cited would appear to make the “entire” joint account sum “presumptively” a resource of the Medicaid applicant.  In the absence of records showing the house payment history argued by the son, perhaps the son should feel “relieved” he only lost half of the joint account….    

In some states, however, including Pennsylvania, “ownership” of funds is a separate question from “right to access funds” under other statutes governing bank accounts.  For example, Pennsylvania has a Multiple Party Accounts Act that provides that “a joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sum on deposit, unless there is clear and convincing evidence of a different intent.” 20 Pa.C.S. Section 6303(a).  Does this law create quite a different presumption?  The court in the Toney case does not address the application of this law, which is based on an older uniform state law proposal.  Does this statutory provision conflict with the cited “presumption” in the state’s Medicaid regulation?

The son in the case appeared pro se, and it is pretty clear from the opinion that the fact finder at the lower level did not find the son credible (not an unusual result in pro se cases, perhaps?).  But, there is another practical problem here.  The amount of money in the joint account at the time of the father’s admission appears to have been about $40,000.  One can see how there may be a trade-off for the son: Pay money to a lawyer to represent his interest, try to represent himself on a very technical legal issue, or accept the state’s determination about allocation of “joint resources” on eligibility for his father.  

If you wait until you are in court to address the ownership issue, “presumptions” under the law carry significant “proof” implications, which non-lawyers would rarely expect.

At a minimum, this case demonstrates another reason why experienced elder law specialists may have a role in helping to plan  for long-term care. A joint account with joint monies may be a reasonable accommodation for early stages of care, but may not be the most cost efficient legal tool for all purposes. 

A tip of the hat to Pennsylvania elder law attorney Rob Clofine for sharing this recent case.