Taking over ownership of a joint account after death is a simple procedure. If you’re co-owner of a joint account, and the other owner has passed away, you’ll just need to submit an original death certificate to the financial institution where the account is held. Once you take over, though, you’ll need to know about some possible tax issues.
Income Tax Issues
Once you take over sole ownership of a joint account, you become responsible for any Income Tax on the account earnings. However, you only have full tax liability from the date you take over the account. Before this date, you’re only responsible for your share of the taxes, just like you were when your co-owner was alive.
Estate and Inheritance Tax Issues
Joint accounts are includable in the estate of the deceased for estate tax purposes. It’s always best to get the advice of an experienced attorney when it comes to estate and inheritance taxes. In general, though, if your co-owner was not your spouse, then the whole value of the account as of the date of death will be counted for estate tax purposes. If your co-owner was your spouse, then only 50% of the account value will be counted. The issue of estate and inheritance taxes is also affected by whether or not the deceased owner had an estate plan, and the terms of the estate plan. The plan may specify whether you’re obligated to contribute toward payment of the tax bills.
When taking over ownership of a joint account, you’ll want to check with a qualified estate planning attorney to make sure you understand all of your tax obligations.
Larry Parman
Attorney at Law
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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