Property Owned Jointly With Other Than Spouse

Property Owned Jointly With Other Than Spouse

Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.

Joint property with right of survivorship with a caretaker child has been discussed in Post 23.

Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)

Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.

Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.

With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.

A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.

As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.

An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.

Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© May 2009, Post #35