02 Feb Mom put me on her bank accounts. Are there taxes when she dies?

Q. My widowed and elderly mother has added me to her bank accounts. Her will evenly divides her assets between me and my only sibling. Since I’m a joint owner of these bank accounts, will splitting them with my sibling when our mother dies be viewed as a gift by tax authorities and create an unintended tax liability for my sibling?
— Daughter

A. Adding someone’s name to an account is a common estate planning move.

Your question is well founded, but the tax liability will not fall on your sibling.

As a joint owner of the accounts, you will become the sole owner upon your mother’s death if you survive your mother, said Tom Szieber, a trusts and estates attorney at Herold Law in Warren.

But, he said, the proposed split of the accounts will result in a gift from you to your sibling.

It won’t necessarily cause a taxable event, though.

Szieber said if you give your sibling more than the annual exclusion in the year of the gift — $16,000 for 2022 — you would be required to file a federal gift tax return.

Any amount of the gift in excess of $16,000 will reduce your lifetime unified gift/estate tax exemption, which is $12.060 million in 2022, he said.

You would not be required to pay any tax unless you use up your entire exemption, he said.

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This story was originally published on Feb. 2, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.