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My wife's mother passed away recently. My wife is executor. The deceased sold her house before she died and the money was put in a savings account. As executor and having power of attorney , my wife's name was added to the account. The money was used to pay for her care in an assisted living facility. My question is; my wife needs to disperse the money left in the account to each sibling as per trust agreement. If the amount for each sibling is more than $10,000, will the IRS need to be notified by the bank ? I know that this money is inheritance and should not be subject to tax.
The bank is required to report cash transactions that are above $10,000 - that has nothing to do if the money are transferred from one account or another or via a personal check.
Your wife as an executive might need to become familiar with the IRS publication 559 - Survivors, Executors, and Administrators - http://www.irs.gov/pub/irs-pdf/p559.pdf about responsibilities of the executor and heirs.
Please also be aware that POA is terminated after the person's death only your wife may only have access to funds on the account if her name is XXXXX XXXXX account or the account is provision POD (paid on death).
Please also be aware that any income received after the death is taxable - for instance - if that bank pays interest - that interest paid before the death is taxable on deceased final tax return, and if paid after the death - it is taxable for the estate and most likely tax liability will be passed to heirs.
Let me know if you need any help.
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