"Jane" <
jbl...@gmail.com> wrote in message
news:b90b0c61-d25a-425c...@googlegroups.com...
> I have two checking accounts in one bank. One of them is in my name and
my daughter's. The ONLY reason she is on the account is so she can access
money for me if something happens to me and I'm not capable of paying my own
bills.
>
> I did an online transfer of $10k from my own account into hers several
months ago. Will this end up being reported to the IRS? If so, will her
name be on the report?
>
> I'm worried because she is on SSDI (she has MS), lives in city housing and
has Medicaid.
>
> None of my accounts pay any interest.
>
> Is the money in "our" account considered to be hers?
>
> I'm worried.
You did not articulate the concern, but let me try to make you aware of the
real problem with this arrangement. Say that your daughter is joint tenant
on your checking account. I understand exactly why you might want to do
that as a way to avoid probate costs when you die or to allow her to help
you if you get sick. But let's speculate that - at some future time - she
fails to pay a tax bill and the state she lives in does a legal filing to
seize the money. The state absolutely will see that she "owns" this money
in your account. And they will seize it without a second of hesitation.
They won't care that the money was actually yours. They won't care that
this account was structured to avoid probate. From the point of view of the
law, you both own that money equally, and all of that money can be used to
satisfy her debts in a collection attempt. This same logic would also
apply if she gets sued by someone.
There is no chance you will make this account invisible to your state, if
the bank has offices that are within your state. In the modern age, there
is no privacy. Give up on that illusion.
What *might* work for your case is to open up a bank account in a different
state of the country *that has no offices in the state where your daughter
files*. In that case, the state where the tax claim is made may not even
have access to information about the out of state account. And - if they
did find the money - they cannot as easily seize it without going through
additional due process in the court of a different state, which might not
even recognize their jurisdiction. Does the state want to hire an out of
state attorney to collect a small tax bill? Maybe yes and maybe no.
Note that the above is NOT the same as opening up an account with a national
bank in another state! For example, say your daughter pays taxes in
California and opens up a Citibank account with you in Texas. California
will see the money and simply show up at a local California Citibank office
with a legal order and demand payment. The California office of Citibank
will - without hesitation or advance notification to you - simply transfer
the money, per the terms of the court order, from your Texas account. So
if you are protecting her from California creditors, you must make sure that
the bank has *ZERO* presence in the state of California.
Isn't the law wonderful?