Momma has large savings account (several hundred thousand $$) and four children. One of them, a daughter, lives close by and tends to her mother, who is in failing health.
In 1996, Momma adds her daughter's name to the savings account. In 2002, the account is still carried jointly, but the SS# on the account is changed to the daughter's SS#. From that point forward, daughter reports interest on her taxes.
Daughter has never touched the principle. Title laws in her state are clear that ownership of the funds never change hands until daughter invades the principle. (As a footnote, I'm not aware of any state where this is not the case)
Daughter and husband could have been gifted $20,000 annually beginning in 1996, and up to $24,000 in later years. Had this been done, over half of the money could have been transferred by now. Is it possible to claim gift treatment for gift tax purposes, even though the gift is not consummated under title laws?
There are many cases where tax laws for estates and gifts differ from the ownership laws of the state. I'm hoping this is one of them.
The situation gets more attention in 2007, because the mother dies, and the daughter has never touched any of the money. If the gift could never be consummated for tax purposes, then all of the money is in mother's estate, and the siblings can possible lay claim to it.
In case my question wasn't clear: Is it possible for gift tax treatment to differ from state ownership laws in terms of transfer of property?
In 1996, Momma adds her daughter's name to the savings account. In 2002, the account is still carried jointly, but the SS# on the account is changed to the daughter's SS#. From that point forward, daughter reports interest on her taxes.
Daughter has never touched the principle. Title laws in her state are clear that ownership of the funds never change hands until daughter invades the principle. (As a footnote, I'm not aware of any state where this is not the case)
Daughter and husband could have been gifted $20,000 annually beginning in 1996, and up to $24,000 in later years. Had this been done, over half of the money could have been transferred by now. Is it possible to claim gift treatment for gift tax purposes, even though the gift is not consummated under title laws?
There are many cases where tax laws for estates and gifts differ from the ownership laws of the state. I'm hoping this is one of them.
The situation gets more attention in 2007, because the mother dies, and the daughter has never touched any of the money. If the gift could never be consummated for tax purposes, then all of the money is in mother's estate, and the siblings can possible lay claim to it.
In case my question wasn't clear: Is it possible for gift tax treatment to differ from state ownership laws in terms of transfer of property?
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