Want to know what type of estate planning documents are best for your situation? Download a free copy of my easy estate planning guide. Obtain Your Free Will vs. Trust Estate Planning Guide here: bit.ly/3jxgz3R
I am not a financial expert but I have experienced being put on my parents bank accounts before they passed. For me and my 2 other brothers it worked out very well but I can see where for others it may not. I would say it can work out well if all the affected people are in complete understanding of the “senior” person(s) desires and there must be a completely trustworthy person involved.
Question my father and I are creating a joint bank account I am selling my house and putting my equity $300,000 in there. Will my father be able to withdraw money say 100,000 for example as long as it’s in our joint bank account? Or is there a tax implications on this? Thanks
For joint accounts, yes generally any joint account holder can withdraw the funds at any time since they have legal title to the account. For 2021 you can give up to $15,000 per person per year without filing a gift tax return. This is called the annual gift tax exclusion. Gifts above this amount require you to file a gift tax return with the IRS to report the amount of the gift and deduct the amount you gifted from your lifetime estate and gift tax exclusion (currently $11.7 million per person for 2021 but scheduled to go up to $12.06 million in 2022). This annual gift tax exclusion amount is going up for the first time since 2018 to $16,000 for 2021. So if your plan is to give money to your father, you could do $15,000 in 2021 and an additional $16,000 in 2022 without filing a gift tax return. Or you could give him the entire $100,000 in one year, but you would need to file a gift tax return to report this gift to the IRS. It is unlikely you would owe any gift tax, unless your total estate at death subject to estate and gift tax is over the $11.7 million limit discussed above. You can learn more about the new limits here www.forbes.com/sites/ashleaebeling/2021/11/11/new-higher-estate-and-gift-tax-limits-for-2022-couples-can-pass-on-720000-more-tax-free/?sh=bf7146174f7a If you need to file the gift tax return, a qualified CPA should be able to help you out. Hope this helps and congratulations on selling your house!
@@BurtonLawLLC Wow thank you for this detailed message! This all makes sense The only part that is kind of foggy to me is is he able to withdraw all 100,000 of the funds since the money is technically “both of ours” in our joint account? Or does that still consider him to do the gift tax form since it’s over the alotted amount of 15k?
@@OKZK_Bros Thanks I am glad it was helpful to you! Legally if he is a joint owner I think he could withdraw $100,000 without your permission (check the bank rules to make sure), but on the tax side I think if he didn't contribute any money to the joint account then you would be making a gift to him if he did that. So you can gift him the annual exclusion amounts states above, or file a gift tax return and do the $100K all in one year. Consult with your tax advisor about the specifics of both before attempting either method. Thanks for tuning in!
@@OKZK_Bros Check out page 5 of the Instructions to Form 709 here www.irs.gov/pub/irs-pdf/i709.pdf The IRS discusses an example about using a joint bank account to make a gift. Here is an excerpt: "If you create a joint bank account for yourself and a donee (or a similar kind of ownership by which you can get back the entire fund without the donee's consent), you have made a gift to the donee when the donee draws on the account for his or her own benefit. The amount of the gift is the amount that the donee took out without any obligation to repay you." Hope this helps!
Currently in 2023 the federal estate tax lifetime exemption per person is at $12.92 million, so whether the assets pass by Will or by revocable trust the estate tax exemption level is the same. Here is a good overview of how it works smartasset.com/taxes/all-about-the-estate-tax
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Want to know what type of estate planning documents are best for your situation? Download a free copy of my easy estate planning guide.
Obtain Your Free Will vs. Trust Estate Planning Guide here: bit.ly/3jxgz3R
I am not a financial expert but I have experienced being put on my parents bank accounts before they passed. For me and my 2 other brothers it worked out very well but I can see where for others it may not. I would say it can work out well if all the affected people are in complete understanding of the “senior” person(s) desires and there must be a completely trustworthy person involved.
Very interesting
Well it's better than the bank getting it.
Just curious - can a person be a signotory on the bank account without being a joint owner?
Yes, absolutely! Great question and thank you for asking.
Question my father and I are creating a joint bank account I am selling my house and putting my equity $300,000 in there. Will my father be able to withdraw money say 100,000 for example as long as it’s in our joint bank account? Or is there a tax implications on this? Thanks
For joint accounts, yes generally any joint account holder can withdraw the funds at any time since they have legal title to the account. For 2021 you can give up to $15,000 per person per year without filing a gift tax return. This is called the annual gift tax exclusion. Gifts above this amount require you to file a gift tax return with the IRS to report the amount of the gift and deduct the amount you gifted from your lifetime estate and gift tax exclusion (currently $11.7 million per person for 2021 but scheduled to go up to $12.06 million in 2022). This annual gift tax exclusion amount is going up for the first time since 2018 to $16,000 for 2021. So if your plan is to give money to your father, you could do $15,000 in 2021 and an additional $16,000 in 2022 without filing a gift tax return. Or you could give him the entire $100,000 in one year, but you would need to file a gift tax return to report this gift to the IRS. It is unlikely you would owe any gift tax, unless your total estate at death subject to estate and gift tax is over the $11.7 million limit discussed above. You can learn more about the new limits here www.forbes.com/sites/ashleaebeling/2021/11/11/new-higher-estate-and-gift-tax-limits-for-2022-couples-can-pass-on-720000-more-tax-free/?sh=bf7146174f7a If you need to file the gift tax return, a qualified CPA should be able to help you out. Hope this helps and congratulations on selling your house!
@@BurtonLawLLC Wow thank you for this detailed message! This all makes sense The only part that is kind of foggy to me is is he able to withdraw all 100,000 of the funds since the money is technically “both of ours” in our joint account? Or does that still consider him to do the gift tax form since it’s over the alotted amount of 15k?
@@OKZK_Bros Thanks I am glad it was helpful to you! Legally if he is a joint owner I think he could withdraw $100,000 without your permission (check the bank rules to make sure), but on the tax side I think if he didn't contribute any money to the joint account then you would be making a gift to him if he did that. So you can gift him the annual exclusion amounts states above, or file a gift tax return and do the $100K all in one year. Consult with your tax advisor about the specifics of both before attempting either method. Thanks for tuning in!
@@OKZK_Bros Check out page 5 of the Instructions to Form 709 here www.irs.gov/pub/irs-pdf/i709.pdf The IRS discusses an example about using a joint bank account to make a gift. Here is an excerpt: "If you create a joint bank account for
yourself and a donee (or a similar kind of
ownership by which you can get back the
entire fund without the donee's consent),
you have made a gift to the donee when
the donee draws on the account for his or
her own benefit. The amount of the gift is
the amount that the donee took out
without any obligation to repay you." Hope this helps!
@@BurtonLawLLC I’ll take a look thanks for all this help.
If everything is in a trust…doesn’t the estate tax take a significant amount?
Currently in 2023 the federal estate tax lifetime exemption per person is at $12.92 million, so whether the assets pass by Will or by revocable trust the estate tax exemption level is the same. Here is a good overview of how it works smartasset.com/taxes/all-about-the-estate-tax
You can expose your assets to your child's creditors. Bank account will trump your will.
good
good to joint
Hmmm ✓