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RD
RD, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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My Mom passed. She has 5 bank accounts. My sister and I are

Customer Question

My Mom passed. She has 5 bank accounts. My sister and I are joint owners on all of the bank accounts. I
Submitted: 4 years ago via Nolo Press.
Category: Tax
Expert:  NYCLAWYER replied 4 years ago.
Hello and thank you for your question. what are you asking?
Customer: replied 4 years ago.
My Mom passed. She has 5 bank accounts. My sister and I are joint owners on all of the bank accounts. If we close the accounts, will any taxes be owed?
Expert:  NYCLAWYER replied 4 years ago.
I will send this to our tax section.
Customer: replied 4 years ago.
OK
Expert:  NYCLAWYER replied 4 years ago.
Thanks for your patience.
Expert:  RD replied 4 years ago.
What state was your Mom a resident of? How much was the total amount in the bank account? Is this the total estate she had?
Are these regular bank account?
Customer: replied 4 years ago.
What state was your Mom a resident of ?
Maryland

How much was the total amount in the bank account? 5 accounts, over 400K

Is this the total estate she had? The joint bank accounts, one house 250K, one car 5K, Furniture.


Are these regular bank account? Checking accounts and 6 month Cds.

Expert:  RD replied 4 years ago.

Maryland InheritanceTax rates for decedents who died on or after July 1, 2000:

  • Property passing to a child or other lineal descendant, spouse of a child or other lineal descendant, spouse, parent, grandparent, stepchild or stepparent, siblings or a corporation having only certain of these persons as stockholders is exempt from taxation.
  • 10 percent on property passing to other individuals. For more information about the inheritance tax, contact the Register of Wills in the appropriate county.
So, being lineal descendant - you do not owe any tax.
Also, in 2010, there is no estate tax. So if you mom passed away this year, there is no estate tax due or filing required.

In any case- her total estate would have been under the estate filing limits considering the total value of her estate.

There is no income tax due on the amount you receive from her estate as inheritance is no subject to income tax and in your particular case - you did not inherit any tax deferred account from her.

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 4 years ago.
My mom put us on all of her bank accounts as joint owners years ago. These are "or" accounts, so any one can remove money from them. My sister thinks she can just close these accounts and we split the money without running them through probate. I told her if she deposits anything over $5000.00 in an account anywhere that bank will notify the IRS. They may ask her where the money the money came from. She then may owe gift tax or at worst income tax on the whole amount. Running it through the estate, there is MD estate tax of 1%. Then we split it like the will states with no inheritance tax, like the law you sent me states. None of the accounts were POD, because we already had access. If a bank account is POD is the money removed Taxable, or is it just inherited at the owners death?

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