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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4017
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I live in Arizona and my wife will retire in 18 months. She

Resolved Question:

I live in Arizona and my wife will retire in 18 months. She is currently in a defined benefit pension which allows her to name either myself or our 28 year old daughter as beneficiary in the event of her death. My question is this; If she were to name our daughter as beneficiary and she were to proceed me in death, if the pension was direct deposited into a joint account with me being a signer on the account with my daughters tax ID number, is there a way for me to be liable for the taxes and access the funds? I understand the $13,000.00 annual gift exemption, but if it were to exceed that, are there mechanisms which would allow for it? Thanks
Mark
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

He mark

NPVAdvisor :

(Hi)

NPVAdvisor :

Lets take this one at a time.

NPVAdvisor :

There are several different ways to take a survivor benefit on a pension .

Customer:

ok

NPVAdvisor :

Do you know if it's a limp sum payout, or if this is a joint and survivor annuity where there will e a monthly payout for the curvovir?

NPVAdvisor :

Sorry "Lump" sum

Customer:

monthly payment

Customer:

beneficiary will need to designated (either me or our daughter) I want access to the funds if there is a way.

NPVAdvisor :

OK, then the survivor will get a 1099 every year for any amount that will be taxable, regardless of where the money "lands" so to speak

Customer:

Correct

NPVAdvisor :

All your daughter has to do is have it deposited into s joint account

NPVAdvisor :

So your daughter, as beneficiary, can have it put anywhere she wishes

NPVAdvisor :

even hav a check sent to the mail bos

NPVAdvisor :

What she gives to you is her business, legally

Customer:

Isn't there a limit on what she can give away?

NPVAdvisor :

and as you mention if she gives you more than 14000 then she;ll have to file an informational gift tax form ... but she wouldn't have to pay gift taxes until the accumulated amounts go over 5,250,000

NPVAdvisor :

there is an exemption on gift (and the big gift, estate) taxes of 5,250,000 and it's going up every year now

NPVAdvisor :

the gift tax form (IRS Form 709) is simply to track against that exemption

NPVAdvisor :

and if the yearly amount is under 14000 there's not form at all

Customer:

Am I correct in believing that I could write checks on the joint account?

NPVAdvisor :

Sure, If you set it us as a joint ownership, both of you could write checks

NPVAdvisor :

sorry for the typos - doing this on a device ... trying to get back tp the computer now

NPVAdvisor :

But yes, also... in a joint account...

Customer:

and if the amount exceeded 14,000.00 in a year it just goes against her total lifetime exemption?

NPVAdvisor :

if one of you pass away, it becomes the other's money

NPVAdvisor :

Joint Tenneacy with right of survivorship is the full name

NPVAdvisor :

Yes, lifetime exemption

Customer:

I understand. that's why I am trying to set this up as she likely will out live me by several decades.

NPVAdvisor :

Yes, just to put numbers onit, if she gave you 3,000,000 over her lifetime and died today (again the amount goes up every year) her estate could still be worth 2,250,000 without estate taxes against the estate at her passing

NPVAdvisor :

And we now have something called portability, where the amount of the gift not used bu one spouse can be passed to the surviving spouse, so if she is married that number (ir becomes marreid) and ity were today, that number is XXXXX over 10,000,000

Customer:

I just want to make sure that if she opens up an account in her name with me as a signer, I pay her tax liability on an annual basis, have access to the funds and upon my death she and her account just continue uninterrupted?

NPVAdvisor :

Sorry, should have said the amount of the EXEMPTION

NPVAdvisor :

that's correct

NPVAdvisor :

Joint account, and be sur they set it up as (and this IS the default on joint accounts) WITH RIGHTS OF SURVIVORSHIP[

NPVAdvisor :

jtwros

Customer:

and providing the taxes are paid and any excess of 13,000.00 per year, the IRS is notified at tax time all should be good with the IRS?

NPVAdvisor :

OK, again the taxes on the income stream will be taxed to her (if it's taxable) She will get a 1099

NPVAdvisor :

Then every time she makes a deposit into the joint account, she is gifting you 1/2 of that money

NPVAdvisor :

You will both have the right to sign (she can waive it or not use it

NPVAdvisor :

then if you give her the money to ay the taxes on that income stream, you actually are giving a gift to her

NPVAdvisor :

and finally, the interest that the account itself bears will be 1/2 yours and 1/2/ hers

Customer:

ok thanks

NPVAdvisor :

Your welcome

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4017
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 8 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks Mark

If you'd like more, please let me know.

By the way, if your daughter is the person listed first on the account, and is the person who signs the W-9 form, the way most banks do it, she will be the on getting the 1099-int.

I noticed you only gave me an OK feedback, if there's more I can do your you or you have additional questions on this, let me know.


Lane


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