The Gift That Keeps Taking?

Q. My spouse and I received a $10,000.00 CD in my spouse's name several years ago as a gift; this was given to us by my spouse's mother. We have claimed the interest on this CD on our federal tax returns every year. This year 2005 when I began to do my federal tax return I realized that I did not have the 1099 INT. When I called my mother-in-law about this, she said, "when the CD matured that she removed this from my spouse's name." We do not understand how this could happen. My mother-in-law was not named on this CD as an owner of this money. If this CD/money was a gift, how is it possible for her to get control of this money without the signature of my spouse?



A. This is not an unusual situation. I saw this quite often the short time I worked at a bank.

You are right in that your mother-in-law cannot do anything with the CD. The problem is that the person working at the bank that she has been dealing with either doesn't have a clue or may have thought it was initially put in your wife's name by mistake.

Either way, the bank screwed up and is liable for that transaction. If you were to go to the manager and ask what happened you may get relief. If not, ask to talk to the bank compliance officer who should have a better understanding of ownership issues.

The real rub comes in how your actions will affect you and your wife's relationship with her mother. If that isn't a concern then you WILL get that money bank and it will be taken away from the mother-in-law.

Your posted comments on this and other questions are welcome.
If you have a question for Jeff an answer is just a click away.
Find a wealth of information at Jeff's website.