ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, May 13, 1996 TAG: 9605130149
SECTION: BUSINESS PAGE: 6 EDITION: METRO
COLUMN: Money Matters
SOURCE: MAG POFF
Q: I recently read in the literature of a major brokerage that if one owner of a joint account held as "joint tenants with right of survivorship" dies, the account passed in its entirety to the surviving owner and is not counted as part of the probate estate of the deceased person.
Does this mean that the value of such securities is not included to determine the $600,000 exemption from estate taxes? If so, does this also apply to home and other things held in the same way?
A: There are two kinds of estates.
One is the probate estate, which includes everything that passes under the will or, if there is no will, under state law. It is true that accounts held in names properly titled "joint tenants with right of survivorship" pass outside the will and thus outside the probate estate.
You should be aware that, under some circumstances, a surviving spouse can attack the transfer of property in this manner.
The second kind of estate is the taxable estate. Everything in the estate is taxable regardless of the manner in which the property is transferred to another person. A brokerage account, a home and the like are part of the taxable estate. You cannot escape taxation merely by changing the name on an account.
The literature from your broker mentioned only the probate estate. It did not cover taxes, which must be paid on the entire estate.
Probating a will
Q: Recently my mother died after a long and happy life. My father had died many years before. I have two siblings.
In my mother's will, I was appointed her "personal representative" to dispose of her estate in accordance with the will and to pay all of her obligations.
Because she had given most of her assets to her family during her lifetime, she had few remaining assets at the time of her death including a few hundred dollars in a checking account, three pieces of furniture in her nursing home room, some used clothing and assorted pictures and photographs.
She had no dependents.
I have distributed the assets to my siblings. I have paid all of her just debts. Everyone is happy and satisfied with the results.
Is there any need for me to take this will to the courts since everything has already been done and everyone affected by the will is satisfied? Or can I simply file it away with our family papers?
A: Under the law, you had the obligation to probate your mother's will before distributing the assets. The court would have then discharged you from further liability when you submitted a satisfactory report to the commissioner of accounts. It is not difficult to probate a will in Virginia, although it would cost you a little money, and the clerk of the circuit court in your community would assist you in this task.
The probate court exists for two reasons. One is to determine that the assets of the estate are distributed in accordance with the wishes of the deceased. The second is to relieve the executor of further liability by certifying that the accounts are satisfactory.
As a practical matter, since taxes are not involved, you could probably get away with the course of action you suggest: filing away the papers. Keep careful records of what you have done, however. And it would be a good idea to obtain written statements from your siblings that they are satisfied with your handling of your mother's estate.
You are taking a risk by not going to court, however. Families can fall to fighting, and someone could later accuse you of bad faith. You can probably trust your siblings, but trouble could come later from the child of a sibling.
So do what you can now to make a record of your proper handling of the estate.
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