How to distribute money to siblings from account that was co-owned with mother now deceased?

Thomas T

If you and your sisters were joint bank account holders at the time your mother passed away, then the surviving child would be considered the legal owner of the funds in each account. These accounts would not need to go through Probate if they were jointly held. There is no requirement for anyone to pool all the money into one account unless you had an agreement with your siblings to do it. If there was an agreement to put all the funds into one account, then there should have been an agreement as to how those funds would be distributed. If there is a dispute and I assume there was no Last Will that would give an indication as to how your mother would have wanted things to be divided, all parties should consider splitting the funds equally and closing the account so there will be no further disagreements. If one sibling says she contributed more time, money and effort caring for your mother and should be compensated for it, then you may have a dispute that could lend itself to mediation to avoid any legal action or hard feelings.

Karl Rudolf

There are several details missing which makes it difficult to give a useful answer.
If I can assume that the style of the original account with your Mom's name on it as well as your and your siblings names, was "Rights of Survivorship", it would mean now that your Mother is deceased, the money in the account belongs to you and your siblings. However, keep in mind that anyone of you is authorized to write a check that could clear out most or all of the account. So, now that you closed the account and opened a new one with your siblings, again if you used the Rights of Survivorship style, each one of you could clear out the account. If you had used a different account, such a joint tenancy, and one of your siblings were to die, the amount of money in the account that would belong to the deceased sibling would go into escrow of the estate of the deceased.

A gift tax would not have to be paid on account of your mother's death, however, there is a question about the inheritance tax that may be owed. For the inheritance tax to kick in, the portion of the money in the account she shared with her children would have to have been in the millions, for each of her children to have to pay an inheritance tax, it is possible, however, if she left other assets, such as stocks, bonds, real estate, that all together the inheritance tax could still kick in.

Of course, there is also an estate tax to consider which kicks in when the total estate she left exceeds a certain amount. With regards to these 2 taxes, you need to be concerned about the Federal Estate and Inheritance taxes, as well as those of the state you live in.

In no cause, do you have to pay a gift tax because the money came to you and your siblings because of a death, therefore it is an inheritance and not a gift.

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