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Troubletos
Returning Member

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

Is this a gift or legitimate non-taxable funds transfer?

Here is scenario.  I have joint account with my mom.  Current value is $300.  If she withdraws $100,000 from her personal account from another bank by writing a check to herself (as payee),signs check at bottom and endorses it on back, then deposits check into the joint account, will this raise any red flags?  Account value would increase to $100,300.

Then, after funds clear,  she walks into bank and authorizes her removal from the account, hence money is only in my name.  Would this raise a red flag with IRS?  Will it be considered a gift even though her $100k deposit check was not in my name?

Or if she remains on the account, what if I transfer $100k out and put it in an account with only my name on it?  Is this a red flag moving large amounts in and out of accounts?  (My goal is to move money out of her name for asset protection purposes.)

1 Best answer

Accepted Solutions
xmasbaby0
Level 15

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

If you are trying to protect your mother's assets, get the advice of an attorney who knows about financial planning and elder law.  If your mom is concerned that someday in the next several years she may need to go on Medicaid, and wants to "hide" assets from a nursing home, etc., be aware that there is a five year lookback at all financial records of EVERY account she had, including banking records, investment records,  tax returns, etc.  They look at every bank statement for five years back, and the activity you describe would be disallowed for purposes of shielding her assets.  Get an attorney to help you with planning her financial affairs.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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5 Replies
TaxGuyBill
Level 9

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

Yes, if you use the money, or the money ends up in an account only in your name, it is a Gift.

In that case, a Gift Tax return would be required, but no taxes would be due unless she has gifted over $6,000,000 during her lifetime.
SweetieJean
Level 15

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

"(My goal is to move money out of her name for asset protection purposes.)"
xmasbaby0
Level 15

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

If you are trying to protect your mother's assets, get the advice of an attorney who knows about financial planning and elder law.  If your mom is concerned that someday in the next several years she may need to go on Medicaid, and wants to "hide" assets from a nursing home, etc., be aware that there is a five year lookback at all financial records of EVERY account she had, including banking records, investment records,  tax returns, etc.  They look at every bank statement for five years back, and the activity you describe would be disallowed for purposes of shielding her assets.  Get an attorney to help you with planning her financial affairs.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Troubletos
Returning Member

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

Thank you for your reply.  Am aware of what you said.  Attorneys just want to sell you complex products costing thousands.   No attorney was upfront what you can do.  Seems some strategies shorten look-back period so you can qualify earlier, but I suspect Medi-caid can simply recover/claim funds after one passes if the qualification period was shortened.  So i just wanted to move assets now so the 60 month lookback period clock begins. I understand if she needs to go into a nursing facility before that time, we will pay for it, don't want to do anything illegal.   Just wanted to know if what I suggest will flag some kind of IRS gift or some other tax .
Troubletos
Returning Member

Is this a legitimate funds transfer, or is this a taxable event or gift tax event?

I wanted to add for those reading this ... In California there is a 30 month look-back period, not 60.  That may change in the future.
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