My mother is 93 y.o. and is still sharp, but I pay her bills and I have check writing ability, but I am not considered a co-owner of her accounts. She has one checking and one savings account at (UGH) Wells Fargo. She was one of the ones who had a checking account opened in her name without her knowledge, which we luckily were able to close, with a lot of aggravation. She doesn’t want to change banks at her age, so I just deal with them.
Anyway, years ago when my father was living, they started a revocable trust with Kahal group. Not real sure the advantages of this move, but whatever, we have it in place. I recently called them with a question and as we spoke, their representative suggested that I move her savings out of her name to avoid/decrease the inheritance tax when we eventually have to deal with this. Her current savings amt is close to 100k. She also has three annuities, two are smaller IRA’s. Total she has to her name is approx. 300k. So, questions for you because this guy is not a financial advisor and we don’t have one. Should I open an account under my name and start transferring money over-I am the executor? Would I need to declare gift tax and only transfer 15k per year? Should I add my name to her current savings account - will this accomplish the goal? I have two siblings and this money will be split evenly with them eventually but used as needed for my mother in the mean time.
Thanks for any thoughts/suggestions!
Some info on estate tax:
Thanks for that info. Unfortunately in Pennsylvania, the inheritance tax rate is 4.5%. And I just read that if my name is added to her account within a year of death, it is taxed at the full rate. After a year, taxed at a fractional rate depending upon the number of people inheriting. That part has me confused, but looking like I should open an account in my name only.
Are you taking this action to benefit Mom or you? After she passes she won’t care what the inheritance tax rate is. I take care of my 93 y.o. Mom too and I do everything I can to even avoid the appearance of self serving actions.
If one of your relatives or even a 3rd party doesn’t like what you’re doing you could be charged with elder abuse or felony theft. And what would your defense be, honestly?
What entitles a child to move $300k of parental assets to their name alone, ever?
And yes you would owe the gift tax but only if it’s a gift. If you yank the assets unilaterally it’s theft.
If you die suddenly since you’re 66 years old, what happens to Mom?
Just stop. Be better.
IMHO, worrying about taxation is ignoring the elephant in the room.
That elephant is Probate! In other words, a bloody state court with a judge and shysters, all of whom are out to get their piece of the action. The way you eliminate that is to avoid it! First I would be consulting with an appropriate lawyer and then work on getting each and every account styled properly such that it never goes into probate at all! Could be as simple as mom puts a POD on each account. It might very well have more than one payee, in the percentages that she wants.
Her Mom is in a revocable trust, like my Mom, it will never be probated. The assets are distributed by the trustee. She has a pour over Will to cover anything accidentally left out …
From what the trust person said, the bank account is not included in the trust. Not sure if that is normal or just this one. The annuities/IRA’s that make up the bulk of the amount are within the trust and would not be probated. I was just trying to do what this guy said to do. Nothing shady. I take care of my mom daily and would not do anything incorrect. Just trying to prevent the inheritance tax hit if that is even possible. I haven’t had to do this before, so I came here for advice or suggestions. I appreciate your input. And, I am the trustee.
Where to start… IRAs and Annuities are never probated, they are distributed by the beneficiary designations, which fire immediately and the assets never become part of the probate estate.
My Moms trust contains bank, brokerage account, house, car, art. IRA and Annuity outside of it.
The fact that you are Trustee and an heir puts you in an inherently conflicted position. It’s not insurmountable, but you need to understand your responsibility is to faithfully discharge the instructions embodied in the Trust documents to the letter. Being Trustee does not give you executive powers generally. You’re not a portfolio manager because you’re a Trustee. You might be a portfolio manager and a Trustee, but they’re separate things.
My sister is the Trustee. I am the asset manager with written Power of Attorney. When Mom passes I will give her a spreadsheet with assets and liabilities and she will distribute. Both jobs are limited in scope.
Thanks for all this information. I am very uneducated in this regard. I have this huge notebook from the company who set up the trust. Full of legal speak that I haven’t wrapped my head around. I will use your guidance and get help to understand the scope of everything involved. Thanks for your input on this.
That fact sheet title is conflating two types of taxes, further complicating people’s general knowledge about the issue. An estate tax taxes the estate. The federal estate tax exemption is $12 million, but reverts to $5 million in 2026 if current law remains in place. 12 states have an estate tax, each with their own tax rates and exemption amounts.
An inheritance tax taxes the heir who received the inheritance. There is no federal inheritance tax, but 6 states have an inheritance tax, also with their own rates and exemptions.
I think Maryland is now the only state with both an estate and an inheritance tax.
Can you contact the lawyer that set up the trust and ask them these questions? Every state has different laws. Is the bank account in the trust? If not, why not? I added my name to my father’s bank accounts at the suggestion of his lawyer, and also so that I could pay his bills and get a debit card to be able to shop for him. When he passed, I distributed his funds as per his will, since I was the executor. He had a Lady Bird Deed in place for his home, which is available only in a few states, including Florida.
My dad had a checking account and I was put on his account (I was POA) so I could pay his bills, etc. But once he passed, I was locked out of the account - I wasn’t a co-owner. So I couldn’t use his account to pay bills, etc. It all worked out OK after the will was done. So if you can get your name on the account, do it.
I would add to this – not just your name on the account, but check with the bank so it’s done in a way that the secondary person has access if you should pass. My name on the account as POA was not enough!!
POAs expire with the decedent.