Joint accounts with father

I have a question as to how the IRS is going to view my dad’s estate when he passes. He is not in good health and I expect to have to act soon.

He has a will which specifies that his estate be divided equally between my sister and me. I am the executor. Ten years ago when mom died, dad put me on all of his bank accounts. The reason I was chosen over my sister was due to me having a better financial situation than she does. It had nothing to do with honesty or integrity. Dad has always been worried that she would default on her loans or have her bank accounts seized/garnished. He theorized that her creditors would seek any accounts with her name on it.

My question is, how will the IRS view these bank accounts? Will they be considered part of his estate or are they going to say they are solely mine? The problem is there is a substantial amount of money in these accounts. If the IRS considers them mine, will I not run into a gift tax situation as I disperse my sister her share?

The gift tax exclusion for 2023 is $17,000. The sum she will be entitled to would take several years to pay if I have to keep it under that amount.

1 Like

Well, that is a valid concern. That said, just because at the time, you were in a better financial position than she was didn’t mean that putting you on the account instead of her completely mitigates that concern. In addition to the possibility that your financial situation may have taken a turn for the worse, there other situations that could have resulted in seizure of those accounts. For example, an accident where you were found at fault and the judgement was more than your insurance coverage could have resulted in those accounts being seized. Additionally, in a divorce, those accounts may end up being part of the amount that needs to be split if they weren’t specifically titled as your sole and separate property.

Just bank accounts, or bank and brokerage accounts? (I will point out that since retirement accounts cannot be jointly owned, hopefully, if your father has any IRAs, 401(k)s, etc. he set up beneficiaries for those accounts.)

It’s not just the IRS, it’s also your father’s state, since those rules are generally state-specific. That said, it depends on how what type of joint tenancy you have. The most common types for non-spouses are joint tenancy with rights of survivorship (JTWROS) and Tenants in Common (TIC). In general, the assets in the JTWROS accounts will pass directly to you, including any basis in the asset, without a step up in basis, while TIC accounts should be divided based on the amount of the account that each of you own. The part that is owned by him will be distributed per the will, while the part that is owned by you will be (and always has been) yours. If the TIC ownership terms were not specified, it may be that his state defaults to 50/50 ownership.

Yes, that’s a problem if you don’t want to fill out a Form 709 gift tax return About Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return | Internal Revenue Service ( I will point out that just filling out the return does not mean that you will owe any taxes - just that your estate tax exemption amount will be reduced by the gift amount. You won’t owe any taxes until you exceed the estate exemption amount, which is $12.92MM for 2023.

Because of the gift tax issue and losing the step up in value on assets, adding someone other than a spouse as a joint owner of anything (bank accounts, brokerage accounts, real estate, etc.) is almost never the best way to pass assets along.



AJ, Thanks for the reply.

It’s only bank accounts. All cash. No IRA. He zeroed those out sometime ago.

Although I’ve been on his accounts for the past ten years, I never knew any details of dad’s finances. All of the money in those accounts are his. I never contributed a dime. I took over his finances in January of this year after his stroke which has affected his memory. It took me several weeks monitoring his mail, emails and looking through his files for bank statements to finally figure out where all of the accounts were.

I’m not sure how the accounts are set up. I am able to write checks against his account. His name is on the check but my signature is an authorized signature.

I do have one idea I want to run by you. Dad did set up a joint account with my sister at a local credit union near her. She lives in North Carolina. He always kept a token amount of cash in this account for her to use in case there was an emergency and she needed to fly home. What if I started transferring funds into this account while dad is still with us? Seems to me that would eliminate the situation that’s been created with the cash.

I should mention that the house and vehicles are Transfer on Death to my sister and myself. I don’t see a problem there.

An authorized signatory is not necessarily a joint owner. That said - you do need to understand what the actual titling on each of the accounts is. It may be different for different accounts.

Yes, that might work. You might want to run the question by an estate planning attorney in your father’s state to be sure you aren’t messing anything up, as states do not all have consistent rules. I would also caution against going over the $250k NCUA insurance limit, given the volatility that’s been happening in banks lately. I would also be sure to check what the titling on that account is, to be sure it is JTWROS.

If your father doesn’t have any property other than the bank accounts, the house and the vehicles, it sounds like there won’t be much of an estate for you as an executor to manage, nor much probate that will happen, unless the joint accounts are TIC, rather than JTWROS. The JTWROS accounts should transfer to the joint owner and TOD (Transfer On Death) assets are often transferable with just a death certificate. (With the caveat that your father’s state sets the rules on what documentation is required for TOD assets to transfer. Some states may require more than a death certificate.) Once you get the TOD assets retitled, it will be up to you and your sister to get them split up and/or sold. You should get a step-up in basis on those assets.



AJ, Thanks for the response.

Just a follow up to what I did in case anybody else ever finds themselves in a similar situation.

I had dad purchase a CD using the funds in our joint account. The CD is in his name only. There is a payment on death that lists my sister as the sole beneficiary. I will build a ladder of CDs so that there is always one maturing every 30 days or so. The end result will be that she is a sole beneficiary to CDs of an equal dollar amount to the cash in his/my account. And dad still has accessibility to his money.

Now, if we could only convince him to move to a retirement home. At this time we are compromising with him and will be hiring a home health service so he can stay in his house. We had a home health service stay with my mother-in-law while she lived with us. We were both working and needed the extra help. It took 3 agencies before we found one that was really good. Hopefully this time will go smoother.