My wife paid her mom's bills and when she couldn't pay her bills she took care of finances. My wife isn't the executor of the will but she was the closest to where she lived. Now the account is in her name, and she wants to pass them to her siblings which is what is in the will. Any suggestions on how to do this? Her sister is executor of the estate and will be opening an estate account too. A CD is coming to an end so thinking it's a good time to distribute these funds but wonder about gift taxes. She lived in NJ.
Thanks for any assistance
Whatever bills are owed will be submitted to the estate when it is probated. The Executor of the Will is responsible for getting those bills paid, not your wife.
There is no gift tax actually due for over 19k annually but your wife will have to file gift tax returns. Not a big deal, it just reduces her estate exemption amount and unless she has literally millions of dollars it won't make a difference. Could make a difference though for a 5 year look back if you all were ever to apply for Medicaid... A risk of joint accounts set up with the goal of the sibling just giving the other siblings their share at death.
How many siblings? How much would go to each? I'm not sure if she can dump it all into the estate account, or if that would be considered a gift to the estate... If your SIL is working with an atty as personal representative that would be a good question for him or her.
Siblings are lucky your wife doesn't want to just keep the money that's another risk of joint titling...
Contact your banker on ways this can be done, and if sister has a Trust and Estate or Probate Attorney involved they will also advise and assist on how this should be done.
As igloo said, it's important to know if Mom was made the co-owner of account, as if she is, then the money is hers.
My condolences on your loss.
A significant difference. If you don’t know exactly how every account was done, speak to a bank officer. A better bank will do an after death letter that details accounts of the deceased and how ownership done and then the disposition on the accounts. It’ll say something like: Madry Jones checking 12345 $9,876 transferred to Jean Jones Smith $9,876 checking 6543 Sept 10, 2025.
If done joint, POD or TOD to your wife then wife 100% owns it completely. Joint or POD or TOD bypass probate totally. $ is hers and hers alone. She may choose to move it to whomever named as per the will to be her Executor. But not required to as she was the beneficiary due to how the account was set up. Now if she’s is only a signatory on the account, it becomes an asset of the estate of the deceased. Usually account frozen by the bank till someone (the Executor) presents their legal authority to take over the $ in it. The Executor will be named once the will is validated by probate court and get Letters Testamentary that shows that. Executor takes over. If your State requires a period of time before probate can be opened, those accounts will sit in limbo.
CDs of her mom’s are different….. mom had to have placed them to a Totten Trust with a named beneficary for the CD to be cashed out. Totten is not the usual “trust” but is a specific way to have a CD have a POD beneficiary named who then becomes the new owner of the CD after death & new CD title issued. Banks can choose whether or not they place an early withdrawal penalty on a CD that has to be retitled due to a death. If you are keeping the CD or depositing it at the same bank, they usually waive the fee. If being cashed out, they usually will bill a retitling fee. If no Totten done, then the CDs sit in limbo till an Executor is named. Again the bank officer will know exactly the ownership on the account and the CDs.
Also please keep in mind, if mom died last month (August) but paid from SSA this month, SSA will claw back this payment. She had to live entire month of August for SSA to pay. Banks will totally honor any SSA clawback as well as those done by other retirements/ pensions.
For now, leave the money where it is but give no access to it. I agree that consulting with a lawyer maybe a good thing.
If she was just a signor on the account with POA, then the account does not belong to her, and the executor should make arrangements with the bank to transfer the funds into the estate account.
It's important that she not freelance on this but do this in close coordination with the executor and an estate attorney if needed.
If the OP's wife had a joint bank account with the mother and the mother dies, that bank account passes to her. She is the owner of it. There is no dividing it up because it can be argued that the OP's co-mingled her money with her mother's to pay the bills and expenses for her mother.
Your wife should not be sending any of the money out herself. The executor will have to handle a final tax return for your mother, and a tax return for the estate, so she needs to handle and record the transactions. (If necessary, the executor can work with a lawyer and/or an accountant, to be paid for out of the estate account.)
My condolences of the loss of your mother-in-law and their mother. It was kind of your wife to handle her mother's finances.
Who passed away? Your MIL? Or your wife? I'll assume you mean your MIL.
"...she wants to pass them to her siblings..." Your wife wants to pass on the money she gained in the joint checking account to her siblings? No, not yet.
Your SIL is the Executor and will be opening an estate account. Can she do this if she's not the Personal Representative?
The CD that is coming due needs to be handled by the PR and it will need to go directly into the estate account and can't be touched until after probate is closed.
If there's a Will and the sister is the Executor, then I recommend she work with an elder law attorney for the probate process.
Laws can vary by state, but if the only remaining living person on your MIL's checking account is your wife, then that money in that account is hers now and not subject to the probate process.
Someone will now need to apply as the Personal Representative in order to have the authority to move things along in the probate process and distribute what's set forth in the Will *exactly as it is outlined in the Will*. None of your MIL's assets should be sold or distributed until the PR knows what the repercussions are regarding probate. It's a strict legal process.
No one should be butting into this process now except the Executor. If the SIL doesn't want to be the PR, then someone else can apply for this designation (and this is a form and a fee that gets paid to the courts, and then the court approves the person or not).
Don't make any assumptions about this process. Please see an attorney. I am Executor, then PR for my Aunt's Will and estate. She passed in Jan 2025. The probate process can take at least 8 months or longer. My Aunt's won't close until I file her final tax return in Jan 2026 (because she cashed in some investments right before her passing). This is in FL.