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    harkplumb's Avatar
    harkplumb Posts: 26, Reputation: 1
    New Member

    Feb 8, 2021, 07:37 PM
    Estate money distribution question
    My father passed away late December of 2019 leaving three children as survivors.
    He had zero debt, an automobile and approximately $120,000 in his checking and savings accounts.
    He created a living trust years before passing away.
    Being the eldest son and the only one of the children living in the state, I lived with and cared for my dad during the final year of his passing with cancer. My brother and sister both live out of town and were not able to help as much.
    As a result, my fathers trust stated that I was to have his car so the only thing left to liquidate was the cash in his savings and checking accounts which I was instructed to divide equally between the three of us kids which ended up being approximately $40,000 each.
    Approximately a year prior to my dads passing my father took me to his bank and put my name as co-owner on both his checking and savings accounts.
    In March of 2020 I went to the bank and had cashiers checks transferred to the banks of my out of town brother and sister for a little over $40,000 dollars each.
    My question is this:

    * Since my father instructed me in his Living Trust to divide equally his checking and savings account among us three kids, and he made me co-owner of his bank accounts, does this mean I would need to file Form 709 showing this money as being a gift from me to my brother and sister?
    This was technically my dads money, but he had to make me joint owner because my mother had passed away two years earlier.

    * Secondly, will I have to pay any gift tax on this money?

    Thanks for your help with this issue.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,834, Reputation: 846
    Senior Tax Expert

    Feb 8, 2021, 08:54 PM
    There are a variety of issues in this situation that dictate that you need to get a local estate tax expert involved.

    From MY point of view, I consider the $40K transfers to be distributions from your father's estate.

    But the fact that you were co-owner of the bank account MAY have changed your status and the IRS MAY view the transfers as gifts from you and not transfers from the estate. It would be prudent to spend the $200-$300 an estate tax professional would charge to examine this situation and give you a written opinion.

    Alternatively, you could contact the National Association of Tax Professionals ( and present this situation for resolution using their paid research department. Their fee would be less than $100.
    harkplumb's Avatar
    harkplumb Posts: 26, Reputation: 1
    New Member

    Feb 27, 2021, 04:05 PM
    Since I posted this question I have since talked to a couple of others that
    had the exact same situation I have.
    Last parent passes away, no debt, no assets to speak of except for some cash
    in the bank and leaving a trust to two or three sibling children but first
    before passing away makes the oldest sibling co-owner of the bank accounts.
    In both of these cases the law rules that the bank accounts are actually the
    property of the co-owner sibling and not technically part of the estate.
    The co-owner sibling can divide this money as instructed by the deceased but
    rather than being considered estate money it is in reality owned by the
    co-owner sibling and the co-owner sibling must file a Fed. form 709 Gift Tax
    Form to report this as a gift money. No taxes are actually paid because the
    amounts fall far under the lifetime gift requirement of a lot of money before
    actual tax is paid. The form is simply the way the Feds keep track of gift money
    so that it can be taxed once the lifetime limit is reached, which will be never
    for the average person.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,834, Reputation: 846
    Senior Tax Expert

    Feb 27, 2021, 04:15 PM
    All good points

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