Houston, TX asked in Estate Planning, Tax Law and Probate for Alabama

Q: Does a bank account with joint owner automatically pass solely to surviving party?

My grandmother has a bank account which listed my father and uncle as joint owners with right of survivorship (added after my grandfathers passing about 10 years ago). My father recently passed so only my uncle remains as a joint owner. At my grandmothers passing will the account be wholely owned by my uncle even if my grandmothers Will states the account should be split between uncle and three grandchildren? If so, and the uncle voluntarily transferred 50% to the three grandchildren, would the amounts (more than $15000 each) be considered an inheritance from the grandmother (since it was listed in the Will) or a gift from the uncle which could be subject to gift tax limits?

1 Lawyer Answer
Jack T. Carney
Jack T. Carney
  • Estate Planning Lawyer
  • Birmingham, AL
  • Licensed in Alabama

A: The best answer is unfortunately the most common one in the law ... “it depends.” Alabama has an entire act about joint accounts and there are many cases about situations like this one.

The presumption is that uncle is the owner. That presumption may be challenged and the Will may be evidence, but taking that matter to court could costs thousands if not tens of thousands of dollars. Sadly, that is the reality of litigation.

If a resolution could be reached, then transfers over $15,000 per person would be a gift. Unless uncle is a multi millionaire, then gift tax would never need to be paid (gifts only have to be reported). A legal or tax professional could assist with any settlement and ensure it’s structured properly. Again, unless uncle is a millionaire ten times over, gift taxes should not be a consideration. Sometimes folks use “gift taxes” as an excuse because they just don’t want to make a gift.

Hopefully this general information will help with some type of amicable settlement.

1 user found this answer helpful

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