How to Transfer a CD & Taxes After Death
Your death ranks right up there with birth in terms of important legal events in your life. It's also the last thing most of us care to think about, let alone plan for. However, there are a few quick things you can do to protect your assets upon death---specifically, you can have ownership of certificates of deposit (CDs) transferred to a beneficiary or trust. There are also certain tax considerations upon death. Understanding what they are will help to determine the best way to safeguard and/or transfer assets.
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Instructions
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Contact your attorney. Whether or not you choose to transfer assets with a will or through a trust, you will need to sign off on a legal contract that should be administered only by a trusted attorney.
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Instruct the attorney to transfer all beneficiary assets, such as CDs, to a specific individual or trust. If the CD is jointly owned, the surviving owner takes precedence over all contracts including trust obligations. You will be asked to sign off on a transfer of assets form. The form documents the transfer from one financial institution or account holder to another.
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Understand the federal estate tax. The federal estate tax is for estates of over $1 million. Tax rates range from 41 percent to 49 percent. The IRS allows a surviving spouse to receive property free from federal estate tax (the unlimited marital deduction).
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Understand your state's inheritance or succession taxes. The rate of the tax varies by state.
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Understand taxes due to foreign entities. If you own stock in a foreign corporation, you may need to pay death duties.
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File a joint return. Taxes for married couples are still due on the last year of the deceased's life and automatically transfer to the spouse unless otherwise stipulated.
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Tips & Warnings
Consult the advice of a trusted tax or financial adviser before making any final decisions.
