Legal Question in Tax Law in California
Tax Status of Funds Received Under a "Pay On Death" Bank Agreement
Are funds received from a bank account or investment (say, a Certificate of Deposit) that result from a Pay on Death beneficiary agreement considered to be a gift under the tax code or are such funds considered to be specific bequests even if not included in the decendent's will?
2 Answers from Attorneys
Re: Tax Status of Funds Received Under a
A pay on death account is a contract allowing the account to pay to the designee outside of a will or probate. It is not a gift during lifetime of the grantor because it is usually revocable. It is however includable in the decedent's estate on death and subject to being included in an estate tax return if one is required.
Re: Tax Status of Funds Received Under a
RE: for Income tax puposes:
The interest earned on the CD is taxable. The CD itself is not taxable as income. The CD and interest are both taxable for purposes of the Federal Estate TAx Return. (Form 706)
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