My parents died and my sister is on their bank account. She is the beneficiary and we are splitting all the money. Will I be taxed for depositing it?

[Bsch4477]

The short answer is no, you won’t be taxed. 

If you are a beneficiary in the will, the inheritance is tax free. But if not, if she shares the money with you it is considered a gift and you pay no tax anyway. If over $17,000 she should report it on form 709 but she wouldn’t pay tax either due to the high gift/estate tax exemption. If you are married, she could give you a combined total of $34,000 without having to file that form. 

[fanfare]

you cannot be the beneficiary of your sister's money in a bank account with her name on it.

If it is to be split, she would have to gift it.

[housei]

I am not a beneficiary and they did not have a will. They split and put all of their assets in each of our names before they died. They didn't want to do a will for whatever reason. They just had an understanding that we would split the money after they passed. My dad put my sister on his bank account a few months ago and just passed away. The amount is several hundred thousand dollars. 

What would be the best way to handle this? 

[DoninGA]

As @Bsch4477 stated "if she shares the money with you it is considered a gift and you pay no tax anyway. If over $17,000 she should report it on form 709 but she wouldn’t pay tax either due to the high gift/estate tax exemption. If you are married, she could give you a combined total of $34,000 without having to file that form. "

A gift received is not reported on a tax return, regardless of the amount received.

[Anonymous_]

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@housei wrote:

They split and put all of their assets in each of our names before they died.

My dad put my sister on his bank account a few months ago and just passed away. 

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I am sorry for your loss.

However, the two (above-quoted) statements contradict one another. 

Did you parents put funds in accounts in each of your names before they passed or did your dad put only your sister's name on a bank account?

Note that "understandings" with respect to divisions of property after death are not will-substitutes (i.e., they're not executed with acceptable formalities) and can be extremely problematic.

[xmasbaby0]

Sorry for your loss.    And.....you and/or your sister need to consult an attorney.  Probate laws vary from one state to another, but the fact that your dad died intestate could be quite problematic if a large sum of money is involved.   Before you and your sister start dividing that money by two, or whatever you are doing, you need to determine whether there are any outstanding debts owed by the estate, which must be paid before you keep all the money from the account(s) and just divide the assets.

[Opus 17]

"They split and put all of their assets in each of our names before they died. They didn't want to do a will for whatever reason."

I don't know what the other assets are, but in regards to a bank account,

If the account is in the name of the parent with the sister as co-owner, that means the sister was an equal owner of the money with the parent, and is now the sole owner.  This means the sister can access the money without going to court, but it also means that, since she is the sole owner, anything she shares is a gift from her to you.

As the recipient of a gift, you don't pay taxes on the gift.

As the donor/giver of a gift, your sister would have to report any gifts of more than $17,000 to the IRS on form 709, but no gift tax is actually paid unless her lifetime total of gifts is more than $13 million.  (Large gifts must be reported so they can be counted against the lifetime limit.)

Likewise, if you ended up the sole owner of any of your parents's property, and you share it with your siblings, that would be a gift from you to them in the same way.

If there is a house involved, you and your siblings need to see an attorney or tax planner before you think about selling it.  When parents give a house to their children, it can result in a large capital gains tax for the children when they sell, that can sometimes be avoided by proper planning and legal advice.  

[Anonymous_]

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@Opus 17 wrote:

If the account is in the name of the parent with the sister as co-owner, that means the sister was an equal owner of the money with the parent, and is now the sole owner. 

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That would be generally true if the joint bank account were one with a right of survivorship which is typical, but not always the case. 

Further, some states have laws that abrogate JTWROS if there is clear and convincing evidence that the decedent intended a different result.

@housei  needs to consult with local legal counsel, particularly since there are substantial assets here.