My girlfriend's grandfather passed away in December of last year. His three kids were on his account as POD. The bank that holds the account is refusing to give them a statement of interest earnings for the first three quarters of the year. They say that the kids are taxed for the interest on the account for the entire year and not just the fourth quarter when the grandfather died. Is this true?
The bank also claims that a person's social security number no longer exists after they die which would make it impossible to conduct any of the grandfather's business, sell his house, or close his other accounts. Is this the case?
It's too bad that the bank didn't offer to split up the interest earned on the account to report amounts earned before the gentleman's death under his name and social security number, and the amounts earned after that date under the names and SSNs of the three kids. That would have made things so much easier for everyone (except the bank, of course).
Regardless of how the bank reports the interest, however, the three beneficiaries can split the amount up among themselves and the gentleman's estate for tax filing purposes. To transfer accountability for interest reported in a beneficiary's name incorrectly, the beneficiary should get assistance for an accountant in filing a form 1099-INT, showing that he or she paid that amount to the party who should be accountable for it.
All of the deceased gentleman's other assets are now owned by his estate, and a personal representative appointed by the court (an executor or administrator) will be responsible for handling it. That will require the personal representative to obtain an estate employer ID number (EIN) from the IRS.
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It's too bad that the bank didn't offer to split up the interest earned on the account to report amounts earned before the gentleman's death under his name and social security number, and the amounts earned after that date under the names and SSNs of the three kids. That would have made things so much easier for everyone (except the bank, of course).