Joint bank account, give money to son/executor without gift tax implications

Question

My grandfather passed away. I was added as a joint account holder onto his bank account to manage his money and bills as nobody else could after my mothers passing. His Son is also a joint account holder.

The banks has stated that legally me and his Son are both entitled to half the money in the account. They told me they can't write a check for the full amount to his Son even if I say I was named on the account for convenience only because they don't know my grandfather's "intent".

My grandfather also had a Will requesting how his money would be distributed and named his son the executor. However as I've learned the Will doesn't really matter in regards to a joint bank account.

The bank will write me a cashier's check for my half. I have no interest on keeping the money, even if legally it's mine, or being involved in it's distribution within the family.

I've been told to cash the check and then write a check to his Son. My concern with this approach is gift tax. It's over the 15K/yr limit so it would seem I'd have to submit a form and subtract from my lifetime gift tax limit if I didn't want to get dinged.

Is there another, better, way for me to handle this? Somehow get my grandfather's money to his Son without it impacting me? While it might seem ridiculous to some, I'd prefer not to reduce my lifetime gift tax.

Answer 1

In a typical joint account (with right of survivorship), one owner's SSN is shown in the bank records and that owner gets the 1099-INT Form (if any), declares the interest on his income tax return etc. When that owner passes away, the remaining owner(s) continue to hold the account under the same conditions and one of the surviving owners' SSN replaces the deceased owner's SSN. Insist that the bank use your uncle's SSN on the account which can continue to be kept open, though the bank may insist on a new account number. In a few days' time, your uncle can withdraw the bulk of the money into his account, and then the two of you can jointly close the account. If you get a check for less than $15K as your half-share, you can endorse the check over to your uncle without any hassles. If the amount is smaller, just hand him the cash if you like, or treat him to a cup of coffee if the amount is picayune. Of course, all this assumes that you are on speaking terms with your uncle and he is willing to cooperate in doing all this. (You refer to him as your grandfather's Son and not your uncle, which raises red flags in my mind).