Inheritance & income tax confusion
August 29, 2014 7:27 AM   Subscribe

My brother had access to my late grandmother’s banking accounts. She passed away two years ago. My mother mentioned several months ago that there was still some outstanding money to be distributed to beneficiaries from the estate. Around $5k had been reserved in case there were any outstanding fees or taxes to pay.

I recently reached out to my brother for an update. He says he is being audited by revenue services because of shared access to these checking and savings accounts, and that the money is in limbo. He says he may end up owing back taxes, totaling greater than the money left, as he was a co-signer, and that he would not be in this position had he not been a co-singer. This makes no sense to me, as I would assume the estate would be held liable for any taxes owed – and as I had assumed the estate was reconciled/wrapped up over a year ago. My Grandmother’s taxes have been managed by the same accountant for years.

My brother and I are not close, and when the bulk estate was distributed there was some confusion over amounts and timing, though it was eventually worked out. My brother has been known to bend the truth to cover his ass on occasion, though not in situations involving other people’s money. He has had spotty work history in recent years, which might account for his taxes being audited (just a guess).

I’m not in dire need of my share of these funds, but I’m concerned there might be something weird going on. Is this fishy? Why would there be any tax implications on my grandmother’s estate for 2013, when she died in 2012? Why would my brother be audited for being a co-signer on some bank accounts? What am I missing here? Note – she was / we are Canadian, living in Ontario.
posted by anonymous to Work & Money (2 answers total)
If it was a joint account then the money is technically his and does not have to go through probate.

While your mom died in 2012 she would be liable for 2013 taxes. Her estate, which if it has to go through probate will be assigned a new tax ID, and the estate is liable for taxes through the year(s) that probate is still open.

If it went through probate you will, or should have been given a page with an accounting of the distributions to sign.
posted by Gungho at 7:54 AM on August 29, 2014

"Co-signer" is a term that generally applies to loans, not checking accounts. You need to find out if these are joint accounts (in which case Gungho is correct that the money is his to use as he wishes, and not just technically), or whether he had access to the accounts under a power of attorney (in which case the money belongs to the estate, but he still could have had broad powers to disperse funds before she died, including as gifts to himself). Either way, if you are a beneficiary under her will, you can reasonably ask for an accounting of the full estate and how your share is being calculated.
posted by beagle at 8:12 AM on August 29, 2014

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