Should my Mom make me co-owner of her CD?

January 29, 2007

From:  Barb and Tom
Date:  Fri, 08 Dec 2006

Mom has a $150,000 CD maturing soon and she wanted to put my name on the new CD as a co-owner, with the earnings being reported under her social security number and tax return. Would $75,000 be a taxable gift? If either of us died, would only one-half be included in the decedent's estate?


Date:  Fri, 29 Dec 2006

Hello Barb and Tom,

I don't think your mother should make you the joint owner of the account.

$75,000 would be a taxable gift. You would be taxable on one- half of the interest, even though it's reported under your mother's social security number.

All of the account could be included in your mother's taxable estate, and one-half would be included in yours.

As an alternative, your mother should consider having the account set up as a "totten trust" account, under her social security number. You would automatically inherit the account at her death, and the interest income would be taxable to her.

Good luck!
Mike Gray

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