My husband and his father share a bank account (and have done so for about 6 months). Recently, his father was diagnosed with dementia, possibly caused by his medications. Should his father need to go into an assisted living facility, will all the assets in that account go towards this or will my husband be able to recover his portion of the assets?
Also, is there a way to protect his fathers assets (his house burned down recently and he will be receiving some insurance money for his loss). Should the dementia be due to not taking medications properly, he might be able to go back into an independent living situation. We live in Texas and my father-in-law is 72 (if that matters).
Your father will have a complicated set of issues if he needs to move into a nursing home and must apply for government assistance (Texas Medicaid). He will need to pass both an income and a resources test that may require that he "spend down" his assets and place his income in a special trust. This includes any liquid assets, such as his bank account and any recovery he receives from his insurance company.
He can, for example, purchase a new home with the insurance proceeds, however the state will likely put a lien on the property for the value of all government benefits, and it will seek to enforce the lien after your father passes away (in most circumstances). He can also purchase certain "exempt assets", such as home furnishings, one car, and certain other items which should not be subject to state recovery.
There are ways to protect some of his assets from recovery by the state, but he will need to consult with an elder lawyer to help. I am attaching a link to your state medicaid agency where you find out more.
Paper trails are your best friend when it comes to Medicaid. When sharing an account with someone who may potentially require Medicaid, it is wise to keep records evidencing the source of all funds in the account. If an account holder can show it is his paycheck going into the account, then he can show that money is not owned by the patient. Even still, I strongly recommend hiring a Medicaid attorney prior to applying for Medicaid. Medicaid is always looking for people who are trying to cheat the system, which makes the application process a bit of a minefield.
If the patient's assets are too high when he applies, the patient is allowed to "spend down" to the required amount. For example, insurance proceeds could be used to build a new house or buy medical equipment and clothing or prepay for a highly rated nursing/assisted living facility. Some of the nicer facilities will only take Medicaid patients if they pay out of their own pocket for a certain amount of time. Some just give priority to those who can "private pay" at the beginning. When trying to decide how to spend down, keep in mind Medicaid can go after a patient's house after they pass away to reimburse the State.
I suggest doing research on facilities in advance so you can find out how to keep him where you want him to live both before and after he applies for Medicaid. You will probably have to call to find out which ones give priority to those who can private pay for a few months. I included a link for a nursing home comparison website.
