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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I am being asked to pay inheritance tax on half of the ...

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I am being asked to pay inheritance tax on half of the value of a CD that was titled: deceased''s name "or" my name. The bank informed me that upon her death, the CD would revert to my ownership and would not be part of the estate. I''m confused.

It seems like the CD was held in joint ownership. So on death of the deceased- you are inheriting 50% of the value of the CD.

However, US does not have an inheritance tax. Some States do have inheritance tax and the tax rate depends on your relation to the decedent in some States.

Which State was the decedent a resident of?

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 8 years ago.
Reply to RD's Post: Pennsylvania. We were not relatives so the tax is high, like 12%.

The bank holding the CD said because the title was "or" instead of "and" that ownership would revert to me and there should not be inheritance tax. If I have to pay inheritance tax on 50% does that mean the other 50% goes into the estate?

dorth
Customer: replied 8 years ago.
Pennsylvania. We were not relatives so the tax is high, like 12%.

The bank holding the CD said because the title was "or" instead of "and" that ownership would revert to me and there should not be inheritance tax. If I have to pay inheritance tax on 50% does that mean the other 50% goes into the estate?

dorth

Did you own the account or was it owned by the decedent? Did both of you have equal access to the account?

Under the Inheritance Tax law, the account will be considered jointly owned if you and the decedent had equal access to the account. Therefore, in this example the survivor is taxed on one-half of the amount in the account. The balance 50% will not be subject to any inheritance tax.

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

Customer: replied 8 years ago.
I'm not sure whether we both had access to the account or not. I didn't find out my name was on the CD until after my friend died.

I guess I knew all along I was going to have to pay inheritance tax but didn't want to hear it.

My only question is whether that remaining 50% becomes part of the estate?

dorth

No, the remaining 50% does not become part of the estate. You own the 50% and the remaining 50% is inherited by you on death of the decedent. So in essence, you own 100% of the CD now.

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

 

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