AHGatto, CPA wrote:

- quote -

From a legal standpoint it would be more along the lines of
a partnership - each is the owner of one-third. If she
takes out more than her share, she is liable to her sisters
for the excess.

- quote -

Good point. To avoid confusion it might help to have the
account in the name of a separate entity, perhaps a
partnership.

Stu

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Michael wrote:

- quote -

Sounds to me like a completed gift.

- quote -

If they are joint owners, no one is the "primary" one.

- quote -

No 1099 is filed for a gift. Gifts are non-deductible to
the giver (except for gifts to qualified charities) and not
taxable to the recipient. No return at all need be filed if
the gift has a value of $11,000 or less per donor per donee.
If the gift exceeds that value, the form to file is a 709,
gift tax return.

Stu

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"Taxmama" <taxlady[at]nospam.pacbell.net> wrote:

- quote -

Ah, ok that sounds like a good idea, thanks. It is 'clunky'
as Herb said but they are humoring their mother and BTW the
sisters are completely trustworthy (I can hear you ! )
............

They are approaching their 60's and mom is in the early
stage of dementia.

Thank you,
Michael

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"Ernie Klein" <eckleinspammenot[at]pacbell.net> wrote:

- quote -

It is a gift BUT the girls _probably_won't be withdrawing
it but not because of any promise.
No strings attached.
The interest stays in the account.
Mom is NOT on the account.
All 3 can withdraw if they want, that is they have rights to
if they want.

The only thing was that it was put into the account in one
piece and MY wife is the _Primary_ name on it with the 2
sisters as joint owners.

I was concerned that it will look like my wife was getting
all of it to the IRS.................I assume the 1099 will
be in just one name ?

Nothing shady here but had a thought that it should have
been deposited in three separate deposits ?

Thank you,
Michael

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I see some potential problems. If they are all co-owners of
the same account, any one of the daughters could withdraw
the whole amount. It could cause a problem between the
daughters if one of them decided to do just that. Or, if
one of them got sued and lost, a lien could be put againt
the entire account.

I am not sure, but I also think that each daughter could
potentially be viewed as having received a $30K gift whereby
a portion is a taxable gift.

From a tax administrative standpoint it also creates a
problem because the account would likely only issue one 1099
to report the interest earned each year under a single ID
number when in fact only 1/3 of that belongs to each
daughter.

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- quote -

Until the money is withdrawn, no completed gift is made.
Have them withdraw the 10K each.

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org

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Shouldn't be a problem this year, but what about a few years
from now. Probably just document the gift. Have the donor
(Mother) write a statement that she wrote one check for
$30,000 (could have been $33,000 ($11,000 each) of which was
a gift to each of the three daughters. Maybe even have it
notarized. Keep that statement with other important papers,
in case the issue rises at a later date. Good Thing the
account is co-owners of all three. In the future have the
mother write a check to each daughter with a memo, then
deposit into the account. Keep a copy of the checks and all
records.

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"Michael" <mcb4u[at]hotmail.com> wrote:

- quote -

I don't see any real Gift Tax problems for your
Mother-in-Law, as long as she correctly reports the gifts.
There are no tax implications to your wife or her sisters.

However, I find the method of gifting to be rather "clunky",
unless she is absolutely sure that the girls are trustworthy
enough to only withdraw their 1/3 share and pay taxes on
their share of the earnings. There are a lot of problems
with this approach.

If I were your wife, I would immediately withdraw her 1/3 of
the principal an d 1/3 of the earnings (which are taxable to
her) and transfer the funds to an account in her name. One
of the other sisters should also do the same.

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"Michael" <mcb4u[at]hotmail.com> wrote:

- quote -

I posted one answer a few minutes ago, but further thinking
has prompted a second answer.

You quote 'gifted'. Is it a gift or not? Your wife and her
sisters could simply withdraw the money and put it in their
own accounts, or simply spend it if they so desire -- or can
they? Are there strings attached to this 'gift'? Did they
have to promise Mom that they wouldn't touch the money while
she was alive? Does Mom receive the interest from the
account? Is Mom's name also on the account? Is there any
understanding that Mom could get the money back if she ever
needs it? If yes to any, then this probably isn't a gift at
all but simply putting Mom's money, that she still has
control of, into a joint account that _will_ avoid probate
after she passes, but will _not_ avoid estate taxes.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

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Michael wrote:

- quote -

Two thoughts:

1) If the mother is ALSO a signer on this account, and can
unilaterally withdraw the funds, then you don't have a
COMPLETED gift. You would not have a completed gift until
any of the daughters actually withdraw funds for their own
use or benefit.

2) Two avoid a host of possible problems with a joint
account, I would advise each daughter to withdraw her share
ASAP. If this is not OK with the mother, then I think it
would necessary to find out ~just what~ the mother had in
mind by establishing this joint account. If, for example,
she was trying to teach everyone a lesson about "sharing,"
or "compassion" for the most needy sibling, or whatever,
then you've got a different situation on your hands.

MTW

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Michael wrote:

- quote -

Well, it depends.

- quote -

It could. If they, as the owners, have the right to
withdraw the money from the account, then all is well. If
for some reason they don't, it could be considered a gift of
a future interest, and not qualify for the annual exclusion.

- quote -

It depends on how and why there is a problem. If there is
one.

Stu

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Ok, The thing is that my wifes mother 'gifted' 30k to her
3 daughters.....so far so good BUT : The money was deposited
in one_piece into a Money Market account that has all 3
daughters as Co-owners of the account, question: is this
going to be a problem at tax time ?

The 3 have a 10k each share but will the manner of deposit
cause Gift tax implications inadvertently ?

If so, how do I fix it ?

TIA,

Michael

"I want to live forever, So far so good. "

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