Can I Remove My Husband as Co-Owner of a CD?

Possibly, but not on your own. Banks usually need your husband’s signature to take him off a joint CD. Removing him also doesn’t guarantee your son will use the money for his care, because your son would have no legal duty to do so. A better option for protecting both your husband and your savings is often a unique trust in your will. An elder law attorney can set one up.

Can I Take My Husband Off the CD?

Usually only with his consent. A CD owned jointly belongs to both owners. Banks typically require both owners to sign before they remove a name or change the title. If your husband understands what he’s signing, he can sign a form removing himself, or you can both cash out the CD and reopen it in your name alone.

If your husband can no longer understand these decisions, the options narrow. If your husband can’t make these decisions himself, someone he named in his power of attorney may be able to sign for him, but only if that document says they can change who owns his accounts. Otherwise, you may need a court to appoint a guardian.

What Happens to the CD If I Die First?

If your husband is still a co-owner when you die, the CD goes to him automatically if the account agreement elected a right of survivorship. Your son, as the primary beneficiary, will only receive it after both of you have died (known as a “payable on death” beneficiary). The bank’s account agreement spells out the rule, so ask for a copy.

That could be a problem for your husband. North Carolina Medicaid generally limits a single applicant to about $2,000 in countable assets, so $50,000 in CDs could make him ineligible until he spends most of it on his care.

What If I Remove Him and Keep My Son as the Beneficiary?

This could work, but it comes with risks. Moving the CD fully into your name is a transfer between spouses, which Medicaid generally doesn’t penalize. If you die first, your son would receive the CDs outright.

The problem is that your son would be under no legal obligation to spend the money on your husband. Here is what could go wrong:

• Your son could change his mind. Once the money is his, he owns it. Your wishes would be a request, not a binding instruction.

• His creditors could reach it. Lawsuits, debts, or a divorce could put the money at risk.

• It could be lost if he dies or becomes incapacitated. The money could end up with his heirs rather than your husband.

• Your husband may have rights too. As your surviving spouse, he may have legal rights to part of your estate. Medicaid may also ask why he didn’t claim them. Ask an attorney how this applies in North Carolina.

Is There a Safer Way to Protect My Husband?

Often, yes. Many elder law attorneys use a testamentary supplemental needs trust, which is a trust created in your will for your husband’s benefit. A trustee, such as your son, manages the money and pays for extras Medicaid doesn’t cover, like clothing, personal items, and outings. 

Because the trust is discretionary and created by a will, it usually doesn’t count against your husband’s Medicaid eligibility. However, there are a few things to be aware of. His eligibility could be put into question as state agencies may look to keep these arrangements countable. Additionally, elective share rights may affect how much can pass into the trust.

To make this work, you can have the CD pass to the trust, through your estate or, if the bank allows it, by naming the trustee as the beneficiary. Unlike an informal arrangement, the trust is legally binding, so the trustee must use the money for your husband.

What Should I Do Now?

• Ask the bank for your CD account agreement and its rules for changing owners.

• Find out whether your husband can legally sign a form removing himself.

• Don’t move any money until you’ve talked to an elder law attorney.

• Ask the attorney about a supplemental needs trust in your will.

• Review your will, power of attorney, and health care directive while you’re there.

Rules vary by state and by bank, and a mistake could cost your husband his Medicaid eligibility. An elder law attorney in North Carolina can review your situation and help you protect both your savings and your husband’s care.