inheritance tax question

Forum|Forum|4 years ago
March 29, 2022
1 reply
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My Step Mother passed away recently. Her will stipulates how her assets are to be distributed to the heirs. All her assets have been liquidated and the monies were deposited into her checking account. Her Checking account had a Payable up on death beneficiary, her biological son. All the money is legally going to him tax free as it is an inheritance below the taxable amount. He wants to honor the will and distribute the monies to the named heirs. The question is, if he does that, would the distributions to the heirs be considered inheritance or a gift since the money passed through him rather than coming directly from the estate? The amount would be greater than the $15,000 annual gift allowance.

TurboTax Home & Biz Windows

Best answer by Anonymous_

POD accounts vest immediately upon the passing of the decedent. The account passes outside the estate and not subject to any provisions of a valid will.

The distributions would be gifts and, if greater than $16,000 (in 2022 to any one individual in any one tax year), would require a gift tax return to be filed.

Anonymous_Answer

Level 15

POD accounts vest immediately upon the passing of the decedent. The account passes outside the estate and not subject to any provisions of a valid will.

The distributions would be gifts and, if greater than $16,000 (in 2022 to any one individual in any one tax year), would require a gift tax return to be filed.

SDun12

Level 5

If the assets were liquidated after her death and then deposited in the POD account, those assets weren't handled properly (unless they were also POD). At this point, it is best to consult with an attorney as to the best way to unwind the deposit of cash after death, if that's what happened.

The son was entitled to the assets that were in the account on the date of death. Other assets, unless they were titled the same, were subject to the terms of the will and the proceeds of their sale should have been deposited in an estate account, not the POD account, for distribution per the will. (Again, assuming those assets were not also held in a POD account.)

Anonymous_

Level 15

@SDun12 wrote:

If the assets were liquidated after her death and then deposited in the POD account, those assets weren't handled properly (unless they were also POD).

The above-quoted sentence is absolutely true and accurate; proceeds deposited in the POD account were not handled properly and need to be unwound.

Actually, the assets that were liquidated (which were most likely covered by the will) were part of her estate. As @SDun12 indicated, you should consult with a local estates and trusts attorney at this point.