Cashing CD Penalizes Grandmother

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READER QUESTION

My mother gave CDs to her grandchildren, and her attorney warned against redeeming them for five years. Why?

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Bills.com Resident Expert
Dec 12, 2011
BILL'S ANSWER

I do not contradict the advice from a reader's attorney as a general rule. The attorney has all of the information at hand, understands the local jurisdiction's laws, and has an attorney-client relationship with the reader.

This letter is a good example of why I have this rule. The date the Certificates of Deposit (CDs) are redeemed seems irrelevant to the $13,000 gift tax annual exclusion. The only reason I can think of why the attorney would advise the grandchildren to not redeem the CDs immediately is they may have a five-year maturity and the grandchildren may lose the interest by doing so. However, I am not your attorney, nor do I have all of the relevant information at hand, and because you did not mention your mother's state of residence I do not know which state laws to apply.

Therefore, I urge you to ask your mother's attorney for clarification of his earlier statement, and why redeeming the CDs has any relationship to your mother living in a nursing home.

I hope this information helps you Find. Learn & Save.

Best,

Bill

www.bills.com/

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