problem with added people on deed

[rcchello]

Just read a story where a couple added a daughter to their bank account and when she died the Couple got hit with inheritance tax, even though the daughter never used the account.

This could happen with a dvc ownership. It all depends on the inheritance laws in your state. In my state inheriting from a child is exempt but this is not true in all states.

This can be added to bankruptcy, divorce, and accidentally passing on to a person you don't expect because you added person to your deed.

 

[crisi]

The federal exemption is pretty high, I don't think most people would have this issue. At a state level, it's still pretty high, Ohio has the lowest exempted amount, and the estate still needs to be worth more than $300k.

If you have this problem, it comes under the heading "nice problem to have". Well, except for the whole death of a loved one thing.

 

[disneynutz]

Adding someone to your deed can cause probate if someone should pass.

Bill

 

[Dean]

Just read a story where a couple added a daughter to their bank account and when she died the Couple got hit with inheritance tax, even though the daughter never used the account.

This could happen with a dvc ownership. It all depends on the inheritance laws in your state. In my state inheriting from a child is exempt but this is not true in all states.

This can be added to bankruptcy, divorce, and accidentally passing on to a person you don't expect because you added person to your deed.

There are risks. Legally the deed change makes anyone added an owner. If they have financial issues of any sort, the ownership could be affected. Legally this would be a gift so if the dollar amounts crossed over the limits for allowable gift, it would generate tax possibilities. If there were taxes due, it would be based on the value at that time. Assuming 2 parents and 1 person being added, the total value of the contract would have to exceed $78K if I understand correctly ($13K per person gift tax) for there to be any gift tax applicable. This assumes no other gifts during the year.

The above situation doesn't make sense though, I have to question it's validity.

 

[JimC]

The article mentioned by the OP is a great example of why qualified professional advice is appropriate before titleing assets. The issues go beyond inheritance tax consequences - which are different from, but often confused with, estate taxes.

 

[rcchello]

Only a handful of states have inheritance taxes, different than estate tax. It looks like in PA you would be taxed at a rate of 4.5% for a parent inheriting from an adult child. (0% if the child is under 21). This appears to be independent of amount inherited.

I just thought it interesting that there are these unexpected consequences of retitling a deed.

I do not claim any expertise, but thought I would pass on something I read.