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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: of 4285  
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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