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Inheritance Taxes And POD Accounts

Friday, May 3, 2013 - 4:34 PM
Does anyone know how Payable on Death accounts fit in with Inheritance Taxes?  Someone recently told me they aren't considered Inheritances as long as they are not probatable .  Is this correct?  I was told they are taxed at the 67% rate and it just doesn't fit in with anything I have ever known.  Has anything recently changed when it comes to how much Inheritance tax we have to pay if we inherit CDs only?   Is it true it is better to list anyone you want to inherit a CD directly on the CD rather than put them on as a POD?  Which is better taxwise.  I apologize for all the questions but I am now really confused about these matters.  If you know of a link I can use to be educated on the subject, please advise.  Thanks for your help.
3
paoli2paoli21,149 posts since
Aug 10, 2011
Rep Points: 5,128
1. Friday, May 3, 2013 - 7:59 PM
"Payable-on-death bank accounts offer an easy ways to keep money—even large sums of it—out of probate. All you need to do is properly notify your bank of whom you want to inherit the money in the account or certificate of deposit. The bank and the beneficiary you name will do the rest, bypassing probate court entirely. It's that simple." For 2013, up to $5.25 million of an individual’s estate will be exempt from federal estate tax, with a 40% tax rate applied to any excess over the exemption amount.

Payable-on-Death (POD) Accounts: The Basics | Nolo.com
6
ShorebreakShorebreak2,381 posts since
Apr 6, 2010
Rep Points: 12,717
2. Friday, May 3, 2013 - 8:08 PM
Thanks for coming through for me again Shorebreak and for the Nolo link.  It helped me understand that the old way, in my case, is still the best way for me to use.  It also saves me from having to undo what I already have in place.  I appreciate your also adding the 2013 amount which is exempt from fed estate tax.  I needed to know that to convince some people why I will not be making changes to my accounts.   Much appreciation for the quick reply also.
4
paoli2paoli21,149 posts since
Aug 10, 2011
Rep Points: 5,128
3. Sunday, May 5, 2013 - 2:42 PM
BTW, if only one Spouse's name is on the POD CD made out to a DD and the Spouse's DP has to go into a nursing home, can Medicaid use these POD CDs to pay for the institutional spouse's nursing home??  Thanks!
2
paoli2paoli21,149 posts since
Aug 10, 2011
Rep Points: 5,128
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