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Old 02-10-2015, 10:28 PM   #41
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I think there is an advantage to truly separate accounts.
Should one partner be sued/bankrupt, the other partners assets are untouchable.
Upon death, the capital gains are zeroed out for the inheriting partner, easy to understand.

Advantage of a joint accounts.
Full and easy transfer upon death (supersedes the Will), bit trickier for the capital gain zeroing (do you have to prove the % split ?, or is it enough to get joint on the account 1 day before death?).
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Old 02-10-2015, 11:53 PM   #42
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I married DH at the ripe old age of 19 he was 21. Knew each other 2 1/2 weeks. Going on 36 years. From the start, we have had everything joint. We literally started with nothing and have amassed a small fortune :-). DH always made more $ than me. That was our decision in the beginning when children came along that I would work part time and tend to all the home things and the kids. He would focus on school and his career. It has worked very well.


I have always paid the bills and done the financials in our house. Funny, DH retired last week and all of a sudden chiming in on finances. I am like....stop right here. You always know what is going on but don't think after me doing the finances for 36 years that you are going to start to rain on my parade. (I really like doing our finances and think if I wasn't in control of them I would go nuts.) Anyway he got the message...you can look and give advice but I am in charge.


If something happened to us, I would definitely have separate accounts etc.
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Old 02-11-2015, 07:44 AM   #43
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Originally Posted by Sunset View Post
I think there is an advantage to truly separate accounts.
Should one partner be sued/bankrupt, the other partners assets are untouchable.
Upon death, the capital gains are zeroed out for the inheriting partner, easy to understand.

Advantage of a joint accounts.
Full and easy transfer upon death (supersedes the Will), bit trickier for the capital gain zeroing (do you have to prove the % split ?, or is it enough to get joint on the account 1 day before death?).
The highlighted statement may be less true than many think, depending upon the state, in case of a lawsuit. Old exceptions like "family purpose doctrine" may still bite, and fault can always be spread.... (Mr[s]. X, why did you let your spouse drive home from the bar when you had to help him/her find the driver's door of the car?)

In any event, retirement accounts and, depending upon structure/state, the spouse's share of homestead, are essentially untouchable if you play by the rules. (We did manage to take a couple's IRAs and their closely-held company's pension plan a few years ago, but they grossly violated the self-dealing rules, among others.)
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Old 02-11-2015, 08:12 AM   #44
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I still do not understand why the separate account practice can hold water at the time of divorce, if there is no written prenuptial agreement. At divorce with the help of lawyers, most people become insane.
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Old 02-11-2015, 08:24 AM   #45
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I pay all the bills. Do all the money transferring. Rebalance the portfolio as needed. I'm a control freak. He's happy to let me do the work.
That's us, too. DH has his own checking account where his SS is deposited and whatever he spends out of that is his own business. (Every month he hands over what's left in it to me and I use it for our expenses.) We've been married almost 12 years and it's worked very well. He knows what we have in investments and generally what it's in, but doesn't want much involvement other than that.

A caution to those of you who think that you're immune from a spouse's creditors if you have separate accounts: when I was married to my extremely irresponsible first husband, he had some big medical bills that he didn't bother to pay or to submit to the insurance. I knew he was getting nastygrams in the mail and he said he'd take care of them. In my heart I knew he wouldn't, but I was busy holding down the only job in the family, trying to pay the other bills and trying to keep our kid sane in a dysfunctional household.

One day my manager called me in and showed me a Wage Garnishment Notice from the local hospital. Yes, they were going to attach my wages for my husband's debt. We were separated and in the process of divorce by then and my attorney fought them off. Eventually I submitted the claim to my insurer (they paid despite the late notice) and the hospital was paid in full from that and his share of the equity in the house.

The next year the hospital called and wanted me to contribute to their capital campaign.
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Old 02-11-2015, 08:29 AM   #46
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I have a joint account which we have funded proportionately to our income
We also are everything joint. But I think proportionate contributions to income is the most fair when accounts are separate. In retirement, if we had separate accounts, we would do the same thing.

For women in particular who usually have lower income and savings, this is important. If "he" also has children who would inherit upon death, then she would have even less to live on should he pass first.
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Old 02-11-2015, 09:06 AM   #47
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Originally Posted by athena53 View Post
A caution to those of you who think that you're immune from a spouse's creditors if you have separate accounts: when I was married to my extremely irresponsible first husband, he had some big medical bills that he didn't bother to pay or to submit to the insurance. I knew he was getting nastygrams in the mail and he said he'd take care of them. In my heart I knew he wouldn't, but I was busy holding down the only job in the family, trying to pay the other bills and trying to keep our kid sane in a dysfunctional household.

One day my manager called me in and showed me a Wage Garnishment Notice from the local hospital. Yes, they were going to attach my wages for my husband's debt. We were separated and in the process of divorce by then and my attorney fought them off. Eventually I submitted the claim to my insurer (they paid despite the late notice) and the hospital was paid in full from that and his share of the equity in the house.
Interesting. Did you ever sign anything when he was admitted to the hospital?

My irresponsible Ex-Wife racked up lots of bills on credit cards, but those never made their way back to me. Even her college loans didn't come back to haunt me (though I still get letters addressed to her every few months for these). Though at the time I must have known better - I refused to sign any paperwork at the college for her loans. I told them any loans were between her and the school and walked out of the room. Surprisingly, she never held that against me, nor even asked me why I did that.
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Old 02-11-2015, 10:18 AM   #48
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Originally Posted by JPatrick View Post
At the root of my problem (or nonproblem really) is the fact that from day one everything in this portfolio was jointly held with me.
When Mom passed the CPA said I could sell it but the basis would be set at when she bought it. Well no easy way to do it at the time, so in the drawer it went.
So now this portfolio contains gems such as this--In the sixties she invested $500 in "Public Service of Indiana," utility with big divie. It was taken over by another utility, then that one was taken over by another, then Duke Power bought the whole mess. Then Duk spun off SE to shareholders. DUK recently did a reverse split. Of course each of these happenings involved a change in share quantity and value.
So it's Warren Buffet stories like this spanning 55 years that makes the challenge what it is.
The good news? I am 100% content to let it ride, but for others maybe it's a record keeping warning.
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Originally Posted by MBMiner View Post
Unfortunately, your CPA was dead wrong. As I understand it, your mother put the securities in joint name with you. When this is done with a nonspouse and the original owner dies, there is a 100% stepup in the basis to date of death values. Therefore, anything that took place before her death is irrelevant. If you have a schedule of the joint assets at her date of death and the values on that date, there is your basis.
Bruce
MBMiner, this didn't sound right to me (bolded part). I googled, and the first three hits said the same thing:

Quote:
If the stock was held in a joint account with someone NOT your spouse, the stepup to fair market value at the date of death applies only to the portion of the joint property contributed by the decedent (the person who died.)
Quote:
However, assets held in joint tenancy title receive only a partial step-up in basis, on the decedent’s share. If the decedent owns the asset alone, the basis of the entire asset will be stepped-up.
On first reading, I thought that meant 50-50, half would be stepped up, half would not. But now I'm not sure of that wording 'contributed by the decedent', and 'the decedent’s share'? Does that mean, if JP's mother put 100% of the assets in the account, that 100% of the assets are stepped up? Or does it mean that if they were 50/50 owners of the account, that 50% of the assets are stepped up?

And if it was held jointly by three people, then 33.3% would be stepped up?

An example in those links would have helped - I find 'legaleze' to be too convoluted and imprecise.

Can anyone provide a link to clear this up?

EDIT: Updating my own post here -

http://finance.zacks.com/taxation-st...eath-4767.html

Quote:
For both federal and state capital gains tax purposes, stock owned jointly with a deceased owner other than a spouse is handled based on the proportion of the original investment made by the deceased. For example, if the deceased made 40 percent of the original investment in the stock, 40 percent of the cost basis is stepped up or down to the price on the date of death.
So it seems, if JP can show that 100% of the assets were made by the decedent, then 100% should be stepped up. Make sense?

-ERD50
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Old 02-11-2015, 10:20 AM   #49
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Interesting. Did you ever sign anything when he was admitted to the hospital?

My irresponsible Ex-Wife racked up lots of bills on credit cards, but those never made their way back to me. <snip>
No, I never signed anything. I believe it had to do with the fact that medical care is an essential service so the spouse can be held liable. My Ex also had a few maxed-out credit cards that were his problem and not mine. I suppose that if they'd been used to buy furniture, clothes for our son, or family vacations one could have argued they were partly my responsibility, but they were mostly high-end clothing and fishing equipment for him.
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Old 02-11-2015, 10:24 AM   #50
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My philosophy is to make everything as easy as possible for my wife (but no easier) if I predecease her; hence everything is in a joint account.
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Old 02-11-2015, 10:42 AM   #51
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My philosophy is to make everything as easy as possible for my wife (but no easier) if I predecease her; hence everything is in a joint account.
In our marriage, nearly everything is in my name except the 2 cars and whatever DH has in his checking account, which isn't much. When we were talking to our lawyer about finances (DH is FINALLY signing a Will and Healthcare Directives on Friday), DH pointed out, quite reasonably, that if I were to get run over while pedaling my bicycle around, he'd be really low on funds till his next SS deposit came in. I moved $25K into a separate account at Fidelity that's Joint Tenant with Right of Survivor. That would tide him over till the trust/estate paperwork get underway and he's happy with that.
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Old 02-11-2015, 03:35 PM   #52
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With us everything is joint but like many we started with a negative net worth. I can see why many with a second marriage and assets would want to keep things more separate.
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Old 02-12-2015, 09:44 AM   #53
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Married happily for 19 years now. All accounts are separate; only the house is titled as joint ownership. Works very well. She pays some bills, I pay other bills. We each have our own reciprocal living trusts for estate planning.
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Old 02-12-2015, 01:47 PM   #54
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Originally Posted by ERD50 View Post
MBMiner, this didn't sound right to me (bolded part). I googled, and the first three hits said the same thing:





On first reading, I thought that meant 50-50, half would be stepped up, half would not. But now I'm not sure of that wording 'contributed by the decedent', and 'the decedentís share'? Does that mean, if JP's mother put 100% of the assets in the account, that 100% of the assets are stepped up? Or does it mean that if they were 50/50 owners of the account, that 50% of the assets are stepped up?

And if it was held jointly by three people, then 33.3% would be stepped up?

An example in those links would have helped - I find 'legaleze' to be too convoluted and imprecise.

Can anyone provide a link to clear this up?

EDIT: Updating my own post here -

Taxation of Stock After Date of Death | Finance - Zacks



So it seems, if JP can show that 100% of the assets were made by the decedent, then 100% should be stepped up. Make sense?

-ERD50
Yes it does make sense. In my case, 100% of the money was put in by her. I managed it for her, but didn't put in one dime. The 100% step up passed muster with the CPA and the IRS. This was in 1996 so rules could have changed.
The house was the also held jointly and did not step up. However, when all the capital improvements (new addition etc) factored, there were no taxable gains--funny how that worked out..
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Old 02-12-2015, 02:33 PM   #55
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So it seems, if JP can show that 100% of the assets were made by the decedent, then 100% should be stepped up. Make sense?

-ERD50
No question about it. If 100% of the contribution to the joint property held between nonspouses came from the decedent there is a 100% stepup.
Bruce
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