Gift Tax question

[SpaceMountain]

Hi Guys:

NEED HELP???

I have a 75 year old widowed mother of 25 years and we just did some estate planning for her recently.

We "transferred ownership" of 3 of her NON-IRA JOINT mutual fund accounts. She wanted her name OFF of ALL the accounts. NO FUNDS WERE SOLD............again, just transfer of ownership took place between her kids.

Before the transfer, the accounts were held in:

Account 1: Mom's name (primary SS#).........AND child's 1 name. (joint owner)

Account 2: Mom's name (primary SS#)..........AND child's #2 name. (joint owner)

Account 3: Mom's name (primary SS#)...........AND child's #3 name. (joint owner)

These accounts with her children have been jointly owned for 25 years and ALL taxes have been paid on time and in accordance with the IRS.


The NEW accounts were given to each child individually. (their own SS# only)


Here's the question:

Is there a gift tax if the amount of ALL 3 accounts equal LESS than $1 million at time of transfer? (I'm unsure of that magic number........1 or 2 million)

Mind you, she also transferred the home she's owned for 40 years to one of her sons for one dollar. (common practice for many seniors)

If you include the value of the home the TOTAL exceeds 1 million. (roughly $1.4 million total)

This was all done in January of 2007.

I'm concerned about gift tax implications???

I hope I've provided enough information.

Any advice would be of GREAT help.

Thanks in advance.

Space Mountain

 

[ComputerGuru]

This is a Layman's point of view, but I have been through a similar situation.

I don't think you should have transferred the first 3 accounts to the joint owners.

When my wife's grandmother died 5 years ago, my wife was listed as a joint owner of an account and this is how it was handled.

The account is valued as of the last trading day that the grandmother was alive. The grandmother's estate pays taxes on the gains through that date and my wife "assumes" the cost basis as of that day.

With that said, it appears that you have to pay gift taxes and you have the actual cost basis as your cost basis.

 

[LineTamer+]

there is a million dollar lifetime gift tax exclusion. But the annual limit is 11 or 12,000. I am not positive, but i think if one gifts away more than the annual limit, you have to file a gift tax return to track the amounts given up to the 1 million dollar exclusion. Sounds like the mutual fund assets are under the million mark, so you may be fine there...abrring other gifts were not given in previos years. I am not sure how the tax tratment of the house sold for 1$ factors into the gift tax exclusion though either.

I too would have kept in joint ownership and gifting shares over the years.
Cost basis of the funds is the average price of the fund on DOD.

 

[heart222]

assuming your mom lives until after tax season go in and see an accountant or a lawyer who does estate work. you have to much at stake to ask for opinions here. This is not meant as a slam at many who may know the answers but with 7 figures on he line spending 1 0r 2k is not meaning ful. which o course brings up the other issues power of attorney, living will estate or leave it to go to probate. you really need an estate lawyer. best of luck bobk