Moving money from joint account not a gift
Q: From time to time, I transfer money from a joint checking account I have with my husband to my son’s account, which is a joint account with my name on it. My son is 25 and in graduate school. Last year, I transferred $32,000 to my son’s account. Were these transfers between two accounts that both have my name actually considered a gift?
A: Simply moving the money from your joint account to the joint account you have with your son is not a gift. However, when your son withdraws or spends the money in the account (for instance by purchasing something with a debit card linked to that account), that is when you and your husband are treated as making a gift.
Therefore, if your son spent all of the $32,000 you put in the account last year and the account started and ended the year with $1,000 in it, you and your husband would be treated as having made $32,000 of gifts to him.
However, if the account started the year with $5,000 in it, you added $32,000 more during the year and the account finished the year with only $1,000 in it, the gifts to your son would total $36,000.
Last year, the gift tax annual exclusion was $16,000 per person, so you and your husband were right at the limit, assuming you didn’t make other gifts to your son and he spent only $32,000 from the account. As of 2023, the annual exclusion from the gift tax has increased to $17,000, so you can increase your gifts by $2,000 if you want.
Exceeding the $34,000 will likely have no tax consequence because going over the limit only means that each of you starts using up your $12.9 million lifetime exemption. When your gifts exceed the $34,000 limit, you and your husband would be required to file gift tax returns to report the gifts and let the IRS know how much of your $12.9 million exemption you have used.
Q: After filing a transfer on death deed listing my son as a beneficiary, he has moved to a different address. Do I need to file a new transfer on death deed
with the county showing his current address?
A: No, you do not. The same would be true if you had named a daughter who had just gotten married and changed her name. There would be no need to file a new transfer on death deed.
If you had named your son as your agent on your durable power of attorney or medical power of attorney, both of which typically contain addresses of the agents, you would not need to change those documents either.
The information in this column is intended to provide a general understanding of the law, not legal advice. Ronald Lipman of the Houston law firm Lipman & Associates is board-certified in estate planning and probate law by the Texas Board of Legal Specialization. Email questions to: stateyourcase@lipmanpc.com.