Gift Tax for Non-Spouse Joint Brokerage Account
Father (married) wants to open a joint brokerage account with son (not married) for the purpose of son managing the investments. Father lives in California, son in Washington state. What is the best way to set up this account in order to avoid tax liability on the son? Can a portion be gifted if it is coded as joint ownership? Also, if sons withdraws from the account in excess of gift exsclusion amount, how would that be taxed?
Permalink Submitted by Alan Spross on Thu, 2010-05-20 01:44
A joint brokerage account does not contitute a completed gift until the son withdraws funds from the account in excess of his contribution. If no contribution, any withdrawals in excess of 13,000 per year become a taxable gift to the son. The father would then have to file a 709 reporting the taxable gift, but would not owe current gift taxes until the lifetime gift exemption was exceeded.