Dear Liz: A good friend is leaving me money from her IRA after she dies. I have asked that the gift be designated as “sole and separate property” to me. As I am married and file joint state and federal taxes, can this money be kept separate for my use only? I prefer that my spouse not be made aware of this as they have different ideas about how to use our money.
Answer: Inheritances can be kept as separate property even in community property states where other assets acquired during marriage are considered jointly owned. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
An inherited IRA, however, would be tough to keep secret if you file taxes jointly with your spouse. You’ll be required to take yearly minimum distributions to empty the account within 10 years, and those withdrawals will be taxed as income.
Few couples are entirely on the same page about money, but keeping financial secrets from each other generally isn’t the best way to cope with these differences. Instead, many people find it helpful to have some “no questions asked” money that they can spend as they please without consulting their partner.
I tried to sign up for your newsletter using my late model I pad but the sign up window converts all alphanumeric characters to upper case. My email is in lower case only so it does not allow me to sign up. Any suggestions or is this just a problem with using the I pad!
That’s weird! It shouldn’t matter whether your email address is capitalized or lower case, though, since emails aren’t case sensitive. Try it again and check your spam filter, since it might wind up there.
No clue! I haven’t heard that one before. Sorry!