Gifting money to someone through joint bank account
For elderly parents, spouses or family members: Set up durable powers of attorney, which give access to accounts in certain circumstances (illness, incapacitation, etc.).
Either party uses the account as collateral for a loan, then defaults.Risk of debt collection, credit damage.So, if one of the joint holders dies, there is nothing the surviving joint owner has to do to get that money, Radna says.In states where joint owners can't sever their interests, the value of the gift is based on how long the person you add will live relative to your life expectancy.Also, if the share of the account that passes to the person you add is less than the annual exclusion (14,000 in 2013 you won't even have to file a gift return.
But opening a joint account, whether with family members or business associates, has potential pitfalls, as well.
First, you're allowed to give tax-free gifts of up to 14,000 per year to any one person in 2013.
If you and your partner go to the bank and open a new account with little or no money, it's not a gift for tax purposes.
Citizens, you don't have to worry about gift taxes when you share assets with your spouse.
Both exclusions are also indexed for inflation, so they could go up or down in the future.In most what year did the a's win the world series cases, if its with a child or an elderly relative or maybe a casual business associate, we think there are much better ways to structure your assets than just to have a joint bank account with those people, Sullivan says.Gifts that exceed this amount count against the.34 million (10.68 million for married food gifting supplies couples) lifetime exclusion.Other options, the motivation for joint bank accounts is often rooted in wanting to take care of someone just in case.You probably won't have to pay gift tax, though, unless you transfer more than.25 million worth of ownership.Credit between family members requires mckenzie taxidermy coupon code the formalities of a bank loan, but the rate can be more favorable.Another is to have the party who gets the 1099 deduct half of the interest and make a note on his tax return to that effect and then have the other joint owner pay her fair share of the taxes on her share of the.IT Stock Free/Polka Dot/Getty Images, mORE must-clicks: More Articles You'll Love).Account co-owners enjoy the right to spend, give away or transfer funds to other accounts, without the consent or knowledge of other account holder(s).Even in cases where joint account holders are not married (or perhaps not even related what happens in one persons life can affect the others money.If you're married, the gift tax rules are relatively simple.Also On Forbes, when Bad Things Happen To Good People With IRAs.Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide.As of 2013, the top gift tax rate, which is the same as the estate tax rate, is 40 percent.
But did you know that the tax law regulates your generosity?
And thats kind of a hard pill to swallow for the children.