|Be Alert! Image by M. Gustafson Gervasi 2019|
Time passed and Agnes' health took a turn, with her earthly life ending six months after the bank visit. Grieving, yet still functioning, Anne set about taking care of Agnes' affairs. One day she went into the bank to settle her mother's accounts, death certificate in hand. To her surprise, the 23 year old banker informed Anne about the joint ownership of the accounts, indicating they would all pass into Anne's name, a nice sum of $200,000.
Anne's next stop was her attorney's office, where the pleasant surprise of the ease of money transferring from Agnes to Anne came to a screeching halt. As the attorney talked a sense of dread built up in Anne's stomach. You see, Anne has a sister, Amanda. As the meeting progressed, Anne learned that the joint ownership allowed the balance in the bank account to become Anne's, but Anne's alone. She certainly could share with Amanda, but it was not required. Being a loving sister, Anne had planned to simply write her sister a check, and then heard the term "gift tax".
Under current law, set by the IRS, any one person can give another person up to $15,000 per year (exceptions to apply this being the IRS tax code). Anne could give her sister up to that amount, but the balance in excess of the $15,000 threshold would be subject to the gift tax. Anne owned the money and was gifting $100,000 to her sister. Long story short, CPA and attorney billable hours were used to develop a transfer plan to Amanda that was legally acceptable, and a pinch of wishful thinking was added so that none of the family would die before the transfer was complete. It all worked out in the end, however, the complexity and associated cost was the direct result of the free legal advice handed out by a young banker. A banker, not an attorney. A banker, not a CPA. Remember, you get what you pay for, and in this case the free legal advice turned into some hefty bills and stress.
Thank you for reading, and please remember that a blog is not legal advice. A blog encourages thought and reflection. Always seek legal counsel from a licensed attorney in your home state before taking any action on this subject matter.