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Recently I received a letter signed “Faithful Reader,” telling me: “Upon reading one of your Legal Ease columns about how to shelter assets so as not to lose everything to a nursing home, I am confused.

“Almost six years ago our lawyer just simply put us on direct survivorship so everything goes to our only child after both of us are gone. Since this was done more than five years ago, are we totally O.K.?”

Here is my reply:

Dear Faithful Reader,

Thank you for being a faithful reader. It is gratifying (and boosts my ego) to know that somebody reads my Legal Ease articles in the News and Sentinel.

I wish I could tell you that owning your assets jointly with survivorship with your child would shelter them from nursing home care costs, but it would not be completely true. Let me explain as best I can in the space available.

Your Home. Your home is protected by owning it jointly with right of survivorship with your child. When you changed the ownership from you and your husband to you, your husband, and your child as joint owners with survivorship, you and your husband made a gift to your child of one-third of the value of the property, since what you and he used to own 50%-50% became owned one-third, one-third and one-third. Under current West Virginia Medicaid rules, if the gift to your child of one-third of the value of the property were not yet five years old when you or your husband apply for Medicaid, Medicaid would delay helping you, making you pay your own nursing home bills for a while as the consequence of making the gift to your child.

However, since your child was added to your deed more than five years ago the gift to him is too long ago to cause a problem. WV Medicaid ignores the home until the Medicaid recipient/ owner dies. If the home belongs to that Medicaid recipient when he dies, it will become part of his “probate estate.”

His probate estate assets must be used to pay his bills before the family can inherit them. Medicaid could turn in a bill to his estate and the home, as well as his other assets, would be used to pay the bill. West Virginia did not want to have a Medicaid estate recovery plan, but the federal government made us adopt one. So, we adopted the type of plan that is as narrow as possible. The only assets Medicaid can try to get repaid from are the assets that are in the deceased Medicaid recipient’s probate estate.

Since you, your husband, and your child own your home in all three names and your deed says that the three owners each have the “right of survivorship,” when one owner dies, his share will belong to the other two owners. When the next owner dies, the property will belong to the last surviving owner. It will not become part of the probate estates of either of the first two owners to die. Thus, assuming your child outlives both you and your husband, your home will become owned by your child in a way that Medicaid cannot get at it.

Your Other Assets. Other assets on which you and your husband have added your child’s name are NOT protected from nursing home costs. Even though these assets are owned jointly by the three of you, Medicaid does not ignore them as it does your home. Rather, Medicaid says that if you or your husband still have the right to withdraw the jointly-owned funds, they still are completely available to you and count as money making you “too rich” for Medicaid. Thus, if the three of you have a joint bank account containing $5,000 that any of you can withdraw, Medicaid says all $5,000 is still owned by and available to you and your husband.

Owning these other assets in a joint and survivorship fashion will keep them from going into the probate estates of the first two owners to die, but that alone will not protect the assets from nursing home costs while you are alive.

Before Medicaid will help pay your nursing home bills you must “spend down” (deplete) your own assets until you nearly are broke. The money in jointly held bank accounts, stocks, bonds, etc., counts as part of your assets which you have to spend down to become “poor enough” for Medicaid. Thus, while owning these assets jointly with your child may keep them out of your and your husband’s probate estates, it will not protect these assets from having to be depleted before Medicaid will help you. Much of my work involves helping people protect these types of assets, using other Medicaid Planning techniques which work.

I hope this information helps. And, thank you again for being a faithful reader.

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Gerald W. Townsend is a partner in the law firm of Fluharty & Townsend, with offices in Parkersburg and Williamstown. His practice focuses upon Elder law, meeting the legal needs of seniors in West Virginia, with special emphasis upon Medicaid planning. He welcomes West Virginia clients with elder law concerns, either by direct appointment or by referral from other professionals and can be contacted at jtownsend@fntlawoffices.com.