By Tiffany Williams, Managing Executive, FineMark National Bank & Trust office at Shell Point Retirement Community
A joint bank account lets you name a co-owner for your account. Funds in the account automatically transfer to the co-owner in the case of death. Holding checking and deposit accounts as joint bank accounts can be a simple and inexpensive way to transfer funds immediately upon death. It guarantees your spouse (or other co-owner) access to the family checking account to pay bills and handle other financial obligations. The designation can be changed until the point of death.
A typical bank account would be subject to probate upon death; however, a joint bank account usually avoids probate and the co-owner can generally continue to access the funds immediately after death, without delays.
You generally remain subject to income tax on funds you contribute to the joint bank account while you are alive, and funds in a joint bank account may be subject to estate tax at upon death. Contact your CPA regarding any tax implications.
Gifts qualify for a $14,000 annual exclusion in 2013. Of course, if your spouse is the co-owner, the funds would qualify for the gift or estate tax marital deduction. If the co-owner on the account is two or more generations younger than you (e.g., a grandchild), the funds may also be subject to generation-skipping transfer (GST) tax. Substantial exemptions ($5,250,000 in 2013) are available to protect property from gift and estate tax or GST tax.
If you have a Trust document, your attorney may recommend that your accounts be titled in the Trust.
FineMark National Bank & Trust has an office on The Island at Shell Point Retirement Community. If you have questions about this article, contact us by phone at (239) 461-5999.