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Subject:  Re: Joint tenant effects? Date:  10/3/1997  12:38 PM
Author:  TMFTaxes Number:  449 of 127745

<<As a simple and temporary will, since I have no dependents, I'm considering adding a family member (my father) to my brokerage account as a joint tenant with rights of survivorship. By being the first tenant, I would still pay the taxes, but if I were to meet some untimely fate I wouldn't have to worry about dying intestate. My concern is that, since the value of the account is over $10k, the IRS will consider this to be a taxable gift. Can someone give me the lowdown on this situation? Are there distinctly
better ways to do this, aside from a normal will? Thanks in advance for any help.>>

If you are concerned about dying without a will, Drew, the best way around that issue is to create a will. That way you'll be able to direct your assets to whomever you please. Creating a simple Joint Tenancy generally does not create a "will".

You may also be concerned about probate taxes (I don't know what that situation may be in YOUR state, since those issues are state specific). You'll have to check with your state laws to see if you will be subject to probate. If not, you don't have to mess around with the JT status on your account (at least at this time).

Transfers of certain types of assets into joint tenancy are considered completed gifts when made. Other transfers are considered completed only when withdrawn by tne non-contributing joint owner for his/her use. In general, brokerage accounts are not treated as a completed gift until the non-contributing joint owner withdraws the funds and uses them for his/her benefit. So simply creating the JT will not trigger a gift tax return, since the gift is not completed. may also place in jepordy the "stepped up basis" that you father would receive on an "inheritance" (due to your untimely demise) as opposed to a JT gift that could be created after your father withdraws the funds after your death. So you may be leaving some tax dollars on the table.

Creating JTs among family members is the "poor man's" tax planning tool, and can tend to blow up in your face, depending upon various facts and circumstances. You might want to check with a local estate planning/tax pro in your area to get more information on these issues. You might also want to check with your local bookstore regarding the various issues that you are concerned about, specific to your state.

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