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My mother passed away 10 days ago. Ever since 1998 when my dad passed, I have been on her bank accounts. I recently checked with the bank and I was actually co-owner of the accounts. I have been paying her bills etc for 2 1/2 years since she has been in memory care. I sold her home a couple of months ago as POA, because she was running out of funds. The money for the house was put into her savings account. Mom wanted everything left to be split equally between me and my sister, which I of course will do. My question is since the money for the sale of the house was put into the account of which I am co-owner, when I give my sister half of what is left, will that be considered a gift from me, which will require paying taxes, or an inheritance, which is what it really is.

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It will be considered a gift because you are now owner of that account. If it is above the gifting tax limit, that part will be taxable on your return for giving that large of gift. One way around that is to give it in smaller amounts over several years.
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I'm so sorry for your very recent loss.

Did your mother leave a will?
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Countrymouse, thank you and yes she did have a will. But all she had left was her bank accounts and she wanted it divided up equally.
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FP, you are doing the right thing to share the account with your sister. Since you own the account, your mother's will is not relevant is not relevant, as you realize. The two of you might want to talk to a tax accountant to determine the best way to handle this.

I am sorry for your recent loss. Are you up to dealing with this issue now? Assure your sister that she will get half, and postpone the visit to the accountant if your are not quite ready to to handle business yet.
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Don't worry about it. The lifetime limit on gifts without paying the tax is $1,000,000. I do not think this is going to put a dent in a million dollars.

I had this same issue come up recently with giving my brother some of the money. Totally not an issue for us ordinary people.
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Flash I am reading your question a little differently than others. If all of your Mom's bank accounts were in her name with you as co-owner, you are not gifting money to your sister. You are passing along her inheritance. When my Mom's estate was settled my name was on her bank account. I visited the bank with the executor and stated that the account was actually my Mom's. The proceeds were moved into an estate account to be distributed according to Mom's will.
Alternatively, you could claim half of the joint accounts and the remaining half would be distributed according to the will. This does not appear to be your objective.
Sorry for your loss, it is always a challenge to lose a parent.
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This is just a thought; but the proceeds of the sale of the house will be well documented. The fact that the mother was the sole owner of the house, also well documented. It is therefore possible to prove exactly what money came from what source; and would it then not be possible for the OP to demonstrate that although the money was lodged in her account she did not have title to it while her mother was alive?
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