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Author: footsox Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4297  
Subject: Joint accounts and no Will Date: 9/14/2012 3:05 AM
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Just posting a curiosity question actually. I have been watching my neighbor deal with the death of her sister and have been seeing lots of problems unfold. Her sister died and no one can find a Will in the house. There was also no mention of a Will to anyone before she died. So, they are searching for the Will. (and will have to go through probate)

My neighbor, the deceased person's sister, has told me that her sister had not filed income tax for several years. They have however, found a joint account with both sister's names on it with 100K in it.

I have always been of the understanding that they would have to file the deseased person's income tax before anything could be done with the estate. (At least this was the case with my mother's recent passing) However, I also understand that if there is a joint account, that it doesn't pass through the estate. (Also my experience with my mother's estate.)

So, my curiousity question is - Is the joint account money free and clear to the sister? Or is that somehow committed to the taxes first? My instinct is that the IRS always gets what is due to them.

My neighbor discusses all of this with me, and I have nicely told her to get an attorney. She will need an attorney to go through probate anyway. My neighbor is unfortunately focusing on getting the joint account monies and figuring out how to spend them. After hearing about them sorting through the house for the Will, etc., I am so thankful that we have enough sense to have all of our financial house in order, Will's done, etc. It has really given me a first hand look at how this situation is one you do not wish for your heirs to go through.

Any thoughts on the taxes and the joint account? Thanks. It's interesting to see it unfold, but so unfortunate also.

Footsox
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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4097 of 4297
Subject: Re: Joint accounts and no Will Date: 9/14/2012 3:08 PM
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My neighbor, the deceased person's sister, has told me that her sister had not filed income tax for several years... I have always been of the understanding that they would have to file the deseased person's income tax before anything could be done with the estate.

It's hard to say. A single person over 65 has to file a return if gross income is over $11,200. That's for 2012. For prior years, it has been slightly lower. And if that's all the income there is, Social Security isn't taxable, and not included in that figure. Many retirees do not have to file. As to the probate process, every state has a different rule and procedure as to whether a tax clearance document, closing certificate, or whatever they call it, is required.

So, my curiousity question is - Is the joint account money free and clear to the sister? Or is that somehow committed to the taxes first? My instinct is that the IRS always gets what is due to them.

She can probably get her hands on the joint account just by showing a death certificate and filling out the bank's paperwork to transfer the account.
(Worst case scenario:) Say then the IRS (or state revenue dept., actually just as likely, with probate cases) gets involved, either by doing an audit, or just through the estate process, and decides the late sister owed money. THEN they may pursue the surviving sister under the theory of "transferee liability". Phil is probably the expert around here on those procedures.

My neighbor discusses all of this with me, and I have nicely told her to get an attorney. She will need an attorney to go through probate anyway. My neighbor is unfortunately focusing on getting the joint account monies and figuring out how to spend them.

Sounds like you gave her good advice. And you're probably wisest to leave it at that.

Bill

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4098 of 4297
Subject: Re: Joint accounts and no Will Date: 9/14/2012 7:39 PM
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I have heard the story of a distant cousin's widow, who failed to take care of things and died without any preparation. Her estate has been in probate for years. They think the court appointed attorneys plan to drain it of any remaining assets with their fees, but little can be done about it. They had no children, only cousins.

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Author: footsox Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4099 of 4297
Subject: Re: Joint accounts and no Will Date: 9/15/2012 3:27 AM
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Yes, I hear the stories all the time, and now I am amazed that it is happenning to someone I actually know. It appears that this sister left no Will. It is too bad that the remaining relatives are straightening out such a mess, instead of focusing on remembering her memory. I am going to just keep telling the neighbor to get an attorney. Hopefully it will turn out OK.

Footsox

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