Q: My wife is joint owner on a bank account with her father. He recently passed. What are the tax implications to her?
Also, the intention is to split with her brother. How should this be done such that his tax implications are separate from ours? Bank and brother are in NY, we are in PA.
A:
It is unclear if the father is a PA or New York resident. If we assume the father was a PA resident at his death, then the joint bank account will be taxed by PA at 50% of its value on the date of death and at 4.5%. This assumes that the account existed as a joint account for more than one year before the father's death.
Generally, she would pay the PA inheritance tax. But if there are other assets and the will has a tax allocation clause that provides for the estate to pay all taxes, then such taxes would be paid by the estate.
The transfer of assets to the brother are a gift by the sister. If the gift is more than $15,000, then a gift tax return must be filed. There would probably be no gift taxes to be paid because of the annual donee exclusion of $15,000 and the unified credit of $11,700,000 in 2021.
You should seek an estate attorney to assist you in this matter.
A: Please see my January 14, answer to this identical question.
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