QUESTION
Do I need to set up a tax ID to avoid getting taxed in spliting the financials to my siblings?
Asked on Nov 18th, 2013 on Estate Planning - California
More details to this question:
Currently, my mother is in the last stages of Alzheimer's. My father had taken her name off their joint accounts and put my name (being executor)on his accounts along with him. What is the best way to handle the money when they both pass. His wishes in the will is to split all financials between my siblings. Do I need to set up a tax ID so I don't get taxed as if I were giving a gift? Not sure how this all works and either does my dad nor these so called bankers.
13 ANSWERS
Corporate/Business Attorney serving Beachwood, OH
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Christine Sabio Socrates Attorney at Law
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If your father has already put your name on the bank accounts, then he has already made a gift to you. When your mother passes, nothing will happen since her name is no longer on these accounts. However, when your father passes away, you will be the sole owner of these accounts. You will not need to set up a tax ID since they will transfer to you automatically and will be legally yours. If you decide to share these funds with your siblings, you will be making a gift to them.
Answered on Nov 22nd, 2013 at 6:17 PM
Thomas Edward Gates
You will need a EIN when you probate the estate. Having you as co-tenant on the bank account creates a situation that when your father passes, the money in the account is yours alone. It would be up to you if you wish to share it with your siblings. You are allowed $5.2 million before one needs to pay estate taxes.
Answered on Nov 20th, 2013 at 9:11 PM
Business Law Attorney serving Bingham Farms, MI
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James T. Weiner, P.C.
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A separate Tax ID Number is not what is needed at this time. What needs to happen is a trust set up for your parents estate. If your parents do not set up a trust the funds could arguably be solely yours after both pass and you can legally cut out your siblings. If you do not want this to happen and even if you did this could cause a lots of family issues. Please contact an estate planning attorney to do it right.
Answered on Nov 20th, 2013 at 8:58 PM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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Upon the death of your parents, any inherited accounts would belong to you. If there are income taxes owing, you would be responsible for paying for them. As for gift taxes, there would be no actual TAX, provided the amounts in questions are less than $5,000,000. There would need to be a gift tax RETURN filed, however, to report the gifts to the IRS. A tax ID is probably not going to be necessary, provided the assets simply liquidate, upon your parents' death.
Answered on Nov 19th, 2013 at 4:54 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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No. Joint accounts held by you and Dad will belong to you when he dies. They will not be subject to his will. If you decide that it was really his intention that you share these equally with your siblings, you probably can arrange to do that, promptly after his death. Be sure to consult a lawyer. It may be easier to give them gifts, especially if this can be accomplished fairly quickly with gifts of less than $14,000 per year per recipient ($28,000 per year if you are married and wife cooperates). You will not be taxed on giving a gift and will not be required to file a gift tax return, so long as you do not give any one person more than $14,000 in any calendar year. Even then, excess gifts will merely reduce your lifetime exemption, presently presumably at $5.25 million, going up in January.
Answered on Nov 19th, 2013 at 4:37 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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Your dad needs to get some professional help for his estate plan. A tax ID is not a thing, it is a number that identifies a thing an estate or a trust. Don't create the tax ID if you haven't actually got an estate or a trust. The approach you are taking is already so strange that it is no wonder the banks don't know how to advise you.
Answered on Nov 19th, 2013 at 4:36 PM
The simplest thing is to put it into a trust now and provide in the trust for the distribution.
Answered on Nov 19th, 2013 at 4:20 PM
2 Awards
Yes you do. You may have to go through probate as well when the time comes call an attorney.
Answered on Nov 19th, 2013 at 4:19 PM
Neal Michael Rimer
It sounds like you need to set up a "transfer on death" account with all siblings named or set up a trust account (after creating a trust) so that the transfers go from your parents to the children.. not to you and expect you to make gifts to your siblings. It is possible to set up multiple account under joint tenancy. More analysis is probably required to identify which methods are available based upon the nature and extent of the assets and what costs are involved with each method to determine the appropriate choices that are available.
Answered on Nov 19th, 2013 at 4:19 PM
Settling an estate can be a complex business involving both state and federal laws. It helps to have an attorney available who can answer these questions for you. The executor applies for a tax ID number for the estate for a variety of reasons, including the so-called "death taxes."
Answered on Nov 19th, 2013 at 4:19 PM
3 Awards
Consider placing all children as POD on account. This information is only intended to give general information in response to an inquiry. It does not establish an attorney client relationship. This response is only based upon the limited facts presented and is merely intended to assist you in determining if you should contact an attorney to provide you with legal advice.
Answered on Nov 19th, 2013 at 4:17 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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Obtain the services of a good probate/estate plan attorney and a tax accountant to advise the two of you, re the tax implications and the obtaining of a tax ID number for the estate.
Answered on Nov 19th, 2013 at 4:17 PM
Edwin K. Niles
In California we have no inheritance tax, and the Federal estate tax doesn't kick in until several $M, so I'm guessing that you are concerned only with income taxes. Your dad would pay any income taxes during his lifetime, and upon his death you and the siblings would pay according to earned income on your individual shares. Joint tenancy is not necessarily the best way to pass title. Upon dad's death, the joint accounts would go to you, and it is up to you to respect dad's wishes.
Answered on Nov 19th, 2013 at 4:17 PM