How should this inheritance be handled?

[ivinsfan]

IMHO, having read all the above posts, the key question is this:

Are M and E trustworthy people who are both fully onboard with E getting this money?

If the answer is a resounding YES, then either way should work fine. If not, well... all bets are off. Personally, I think the direct gifting method is preferable (easier, cleaner), but the joint account method would work perfectly well, too, assuming the answer to the above question is YES.

Actually the only person who needs to be fully on board is M since it's her money...

 

[Happyras]

Even though they were divorced could this be considered a common law marriage since they lived together and E is the next of kin?

Pending on the State, in WA it would be considered a common law, or Quasi marriage due to duration and underlying conditions, and unless challenged, that is how it would flow without probate unless contested. If probated by others then proof of conditions would be required to enforce the Quasi status as community property law would depend on that being deemed by the court.

Just my guess....but too many details are not given to judge.

 

[lemming]

Is M on Medicaid as well as Medicare or any SSDI disability or SNAP.? Once she is given the funds then she may be bumped off. Will she need assisted living help soon or later. Can she pay from her own funds?
E needs a lawyer consult M needs an elder care consult and a lawyer. You need a cold drink and a zen vacation.

 

[disneysteve]

Quick update. M decided finally to speak to an estate attorney. Hopefully he will steer her right since her advisor is clueless.

 

[Jerry1]

Quick update. M decided finally to speak to an estate attorney. Hopefully he will steer her right since her advisor is clueless.

That’s good news.

 

[isisdave]

I'm not a lawyer. But it seems to me that putting the money in a joint account is the same as putting cash in a cookie jar and telling E to help himself. He can take it all now, or a little whenever he needs it.

There STILL may be a gift. I don't know if it's all or half, or whether it occurs when M puts it in the account or when E takes it out. But the gubmint is not to be denied, and they will consider it reportable somehow, if the annual amount is above the exemption. The fact that no one wrote one big check won't matter to them.

There is also the matter of what happens if it's in a joint account and E dies before withdrawing it all. It will very likely look like it belongs to M. Again. Also, if M is sued and there is a judgment against her, it will look like it's at least partly hers, and any withdrawal by E after suit is filed will look suspicious.

I'd be curious to know how old M and E are and how much we're talking about, but still, this is a lawyer problem, not an Internet forum problem.

 

[disneysteve]

I'd be curious to know how old M and E are and how much we're talking about, but still, this is a lawyer problem, not an Internet forum problem.

M is 83. E is 65.

I agree 100% that this is a lawyer issue and thankfully there is now one involved.

 

[ivinsfan]

Quick update. M decided finally to speak to an estate attorney. Hopefully he will steer her right since her advisor is clueless.

It will be interesting to see what input the lawyers gives. As for the advisor being clueless as I mentioned before if you were not present for their conversation you don't really know what was said by either party.


Now M is paying a lawyer good money when could have simply written E a check. Doesn't make much sense.

 

[Imackenzie]

Common law...

He is almoat certainly considered her common law husband in almost every state and has a right to inherit. Hire a real lawyer, now.

 

[ivinsfan]

He is almoat certainly considered her common law husband in almost every state and has a right to inherit. Hire a real lawyer, now.

Actually only 10 states even recognize common law marriage and it has lots boxes to check.

 

[imnontrad]

The mother can gift the items to the (ex)husband, but is not legally obligated to.
She will need to fill out an IRS form (709?) due to the size of the gift.
If there are stocks or property that she inherited with a step up basis, that is the basis that would be used if gifted to him and then he sells the stock/property.

 

[badatmath]

Do let us know how this turns out!

 

[pb4uski]

I'm curious to hear your thoughts.


A family member, let's call her A, recently died. She and her husband, E, divorced years ago but continued to live together as a couple until her death (long story irrelevant to the topic). Everyone considered them husband and wife even though they were no longer legally married.


A didn't have a will and had never set up any of her financial accounts to be paid to E upon her death. As a result, her mother, M, is considered under the law to be her next of kin and inherits her funds. All of us, including M, agree that the money rightfully belongs to E.


The question became how to have M transfer the money to E with no tax implications. I do not know how much money is involved but let's assume it at least exceeds the annual gift tax exemption.


What M's financial advisor suggested is for her to open a joint checking account with E but hand over the checkbook and debit card to him so that he has full access to the funds. Her name will be on the account but it will effectively be his money.


None of us really like this method because we feel it should be solely in E's name so that there's no possible way M can screw with it.


1. Is it okay to do it this way?
2. If they do, is there any reason E can't then turn around and withdraw the money and close the account and open a solo account in his name only?
3. Is there some better way this should be handled?

1. No, not ok as M has continuing access to the money if it is a joint account. If M were sued then that account would be subject to the suit since M's name is on it.
2. No reason at all if his name is on the account and that is an option.
3. Once M receives the inheritance, deposit it into her checking account and write check for the same amount out to E and he deposits the check into his checking account.

If over the $17k limit then M can fill out and file the form but the reality is that I doubt that they will ever know or care.