Why would an inheritance be issued as a gift?

Asked over 1 year ago - Redford, MI

Recently, my father passed and the local credit union was not able to dispense the inheritance. They gave reasons of "Homeland Security" as well as his accounts having a daughter as one of the signatories. Her name was added to avoid any probate issues after his passing. If another person is named on the accounts, is it no longer an inheritance? I believe that a gift also comes with some sort of "gift tax" here in Michigan. As an inheritance, there is no tax. Any help would be appreciated. There are four siblings, one of them is from out of town. We're listening to the local credit union manager that likely has some sort of hidden agenda.

Attorney answers (4)

  1. Joseph Jonathan Brophy

    Contributor Level 20

    7

    Lawyers agree

    Answered . Hidden agenda? Most likely just bureaucratic rules of the credit union. An account can be held by two people in different ways. If the daughter is a co-owner, the account belongs to her on death without probate. If she just had a POA on the account, it doesn't belong to her, and probate can't be avoided. It would be a good idea to go to a Michigan probate lawyer for advice.

    Any opinions stated in response to Avvo questions are based upon the facts stated in the question. Responses to... more
  2. Benjamin Thomas Vader

    Contributor Level 10

    4

    Lawyers agree

    Answered . The sister was likely put on as a joint owner. I see CUs and banks do this all the time and it drives me nuts. The sister owns the account(s) outright if this is correct. The sister could give it to whomever she chooses. If she gives 3/4 of it equally to her surviving siblings, she may have an obligation to report each gift to a sibling to the extent that it exceeds the annual gift exclusion amount of $14,000. The gift does not need to reported if each sibling receives less than $14k total for the year. You can split it over two tax years if desired.

    Even if it has to be reported, there is no tax on the gift yet. The gift (if more than $14k) reduces the exempt amount of your sister's estate at her death. The starting exempt amount of a person's estate is currently $5,250,000. Most people do not have to worry about estate and gift tax, they have to worry about untaxed income that is inherited.

    Talk to a lawyer or have whomever is in charge of the estate talk to a lawyer. If the sister is refusing to share, she could be pursued in court on a convenience account theory. There is too much stuff that can go wrong and a lawyer can earn his/her fee by avoiding pitfalls.

    This answer is intended to provide legal information, not legal advice. Legal advice should be provided by... more
  3. Donald Joseph Quinn II

    Contributor Level 15

    5

    Lawyers agree

    Answered . It sounds like she was added as a joint tenant or beneficiary in which case the account is most likely hers. You need to retain counsel to resolve this issue. Good luck.

    Legal disclaimer: This answer does not constitute legal advice. I am admitted to practice law in the State of... more
  4. Jerome George Quinn Jr.

    Contributor Level 8

    3

    Lawyers agree

    Answered . As noted a above it appears she was put on a a joint tenant making the money hers. You should contact a Michigan probate attorney to resolve the matter.

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