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Question for the Money Doctors

Question submitted on Jun 14, 2011.

Question

i have been a co-owner with my mom on a certificate of deposit in the amount of $25,000 for the last 15 years. Recently she passed away. My father preceeded her in death. Do I now own all $25,000 and need not pay any federal and state inherentance tax?

Answer

Thiis is going to depend on what you mean by being a co-owner.

If you are a Joint Tenant in the CD, then you will inherit the CD without any probate consequence. You should inform the bank of your mom''s death so the CD will be in your name. As a Joint Tenant, you should have been paying tax on half of the interest when your mother was alive, now you are responsible to paying the tax on the interest for the entire amount since your mother passed away. You will be getting a Form 1099-INT from the bank reporting this interest.

If the CD was held entirely in your mother''s name, but it TOD (Transfer on Death) or POD (Paid on Death), the CD is automatically transferred to you upon your mother''s death as long as you are named as the beneficiary on the account.

I cannot comment on state inheritance tax because I do not know which state your mother resided.

The federal estate tax applies in 2011 and 2012 if the taxable estate exceeded $5 million.


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