Legal Question in Wills and Trusts in North Carolina

Mother, now deceased, had old private account that was hers and her mothers that was changed after grandmother's death to the my mother and her spouse. Mother had told her sister that she would eventually split that private amount with her sister, which her sister considers as inheritance instead of a gift. Now, my dad is attempting to give this gift but has been accused that the sister expected more. Also, the spouse is routing the gift via 2 family members in NC and then they are gifting to the sister in order to legally avoid the TN gift tax. Question: Will a notarized statement of the family that gives the final gifts stating that it is a gift on behalf of dad suffice to protect him from accusation of not ever giving the gift, if the sister even has grounds to insist on gift?

Asked on 8/09/11, 7:01 am

1 Answer from Attorneys

When you mention "old private account" what is this? A bank account? The rules governing bank accounts are that when 2 or more people own a bank account the proceeds in the account automatically pass to the survivor. But these monies can be reclaimed if needed by the estate of he person who died.

It does not matter what mother "told" her sister. Telling someone something is irrelevant. If both had access to the account, then either one could have withdrawn money at any time.

You do not indicate what happened to mother or if she is alive or dead. You also do not tell me why father is giving the money to sister or trying to avoid the Tennessee gift tax.

And if there is Tennessee gift tax, is any estate in NC or TN?

Assuming that mother died in North Carolina with a bank account that is in her and her sister's names, then the bank account would have passed to sister automatically unless sister disclaims the gift. The disclaimer has to be done within 9 months of death and has to be in writing and filed with the court or the personal representative. So "refusing" without doing it properly is not enough. There is no inheritance tax in NC.

Investment accounts may or may not work the same way if this was an investment account.

Your father can gift up to $13,000 free to anyone he wants free of gift tax. Anything over this is subject to the gift tax rates which are paid by the donor (your father). This assumes that the money in the account is not subject to any kind of estate.

I cannot advise you on the laws of Tennessee as I am not licensed to practice there. If your mother died and her estate is in Tennessee, inheritance of the proceeds in this account will be governed by TN law. You will have to speak to a TN probate attorney. Most states have comparable rules regarding disclaimer and inheritance of accounts. TN may charge inheritance tax and if that is the case, you will have to ask the probate attorney about that.

To my knowledge, there is no way to avoid an inheritance tax - either it is or is not charged. If the designated beneficiary does not want the funds, then she files the disclaimer and the next beneficiary under the will or state intestacy law gets the money. However, if there is inheritance tax, then the new beneficiary has to pay it.

I don't know what you are asking or what you are trying to do but it does not seem right. Perhaps if more information was provided I could offer a better answer. If people are alive, they just give the funds, by check or some other means which serves as proof. I suppose that they can get a receipt if cash is given. If we are talking about distribution from an estate, this has to be done in accordance with law. Receipts are required if in NC. I cannot speak about TN probate law as I have indicated. So I don't know why your father feels that he needs protected. From what? No one can "insist" that a gift be given. The donor has to want to give the gift but they are not obligated by law to do so (charitable pledges may be different). If this is an inheritance, then this is not a gift. It has to be accepted if not disclaimed.

Without more information, your post makes it appear as if people are trying to do something illegal. Your father needs to see a tax attorney or CPA regarding gifts if there is no estate. If there is an estate for your mother, then he needs to speak with a probate attorney in the county/state where your mother resided at the time of her death. That way, your father can lawfully transfer the money to the beneficiary.

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Answered on 8/09/11, 10:30 am

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