6 Ways Adding a Trusted Child to Your Bank Account Backfires

http://playingintheworldgame.wordpress.com/category/business/

From the October 2012 issue of the AARP Bulletin, this outrage:

Carol and Paul Kurland of Leavittown, PA, both in their late 80′s, added their daughter’s name to their bank accounts to allow her access to funds if they faced a sudden health crisis. “Given our advanced age, we thought it was a good idea,” Carol Kurland says. “But we fell into a trap.” Sadly, their daughter Amy, 56, died last October. Two months later, the Kurlands got hit with a tax bill for several thousand dollars. They were amazed to discover that, under Pennsylvania law, a third of the money in their accounts was considered to be Amy’s. They had “inherited” it and now owed 4.5% as tax. “Our daughter had none of her own money in the accounts,” says Kurland, “and in fact, had never even visited that bank. The Pennsylvania Department of Revenue says it regularly hears from unhappy people in similar situations. Banks in the state are not required to inform customers who add names to accounts that they’ll owe taxes if the new person dies first.

Six other states – Indiana, Iowa, Kentucky, Maryland, Nebraska, and New Jersey – also tax inheritances. Four of them – Iowa, Kentucky, Maryland, and New Jersey – exempt parents of decedents, according to Jonathan Griffin at the National Conference of State Legislatures.

After the Kurlands’ tax bill arived, bank officials suggested that granting their daughter a power of attorney could have averted the liability.

“Why didn’t they tell us this before?” asks Carol Kurland. “You lose your daughter, and then you have to go through this. It’s been a bear.”

[I know some jerks who would say why didn't they find out for themselves, like everybody is supposed to know the entire body of law.]


http://moneyland.time.com/2012/10/16/6-ways-adding-a-trusted-child-to-your-bank-account-backfires/

6 Ways Adding a Trusted Child to Your Bank Account Backfires

Outliving your child is a gut-wrenching experience. It's even worse when you've put their name on your financial accounts and owe tax on what you "inherit." Here are 6 reasons to leave your accounts in your own name and get a durable power of attorney for convenience.
By Dan Kadlec | @dankadlec | October 16, 2012

[See the link above in moneyland.time.com for more info