01 Jun Dad died and my sister is on his account. What happens next?

Q. My father died recently and last year, my sister, as his power of attorney, put her name on his account to pay bills easier. The will lists all seven children as equal beneficiaries of all assets after all debts are paid. There are no issues among the siblings. If the money — $350,000 — is legally my sister’s and she disperses it equally among siblings at $50,000 each, do the siblings have to pay a gift tax? This account was 100% our father’s money.
— Trying to help

A. Good question.

This is an example of why it’s so important to plan ahead when it comes to beneficiary designations.

But while tax laws can be confusing, you are overthinking this one, said Nancy Heslin Reading, an estate planning attorney with Reading Law Firm in Newton.

If you receive a gift, you don’t owe any taxes.

In 2023, the annual federal gift tax exclusion is $17,000. Any gifts in excess would go against the donor’s lifetime exclusion, which for 2023, is $12.92 million, he said.

Gifts of more than $17,000 would require the giver to file a gift tax return, but there would be no tax.

But there’s another option.

“Out of an abundance of caution, your sister can disclaim any interest she may have had in your dad’s account, and then the executor can distribute the money pursuant to the terms of your dad’s will,” Reading said.

There are deadlines to disclaim assets, though. Consider working with an estate planning attorney to make sure your sister’s actions are within the law for the state.

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This story was originally published on June 1, 2023.

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.