Q: I have my son listed as joint owner on several of my bank accounts and CDs.

If something happens to me, will he have to pay tax on the accounts? If tax is due, will it be based upon the full value of the accounts or on my half of the accounts' value? Can this be avoided if I remove my name from the accounts?

A: In Indiana, the presumption is that the full value of jointly owned property will be subject to taxation at the death of a joint owner. It's a rebuttable presumption, but it is a presumption.

What that means is if you die, inheritance tax will be based upon the full value of the accounts, not just one-half. Your son can reduce the amount subject to taxation by proving that he contributed a portion of or all of the funds in the accounts. If your son can establish, to the satisfaction of the county assessor's office and the Indiana Department of Revenue, that he contributed a portion of the funds, he can reduce the amount subject to taxation by that amount.

I will tell you that proving that can be difficult. I've seen it happen a couple of times but usually in reverse.

An example occurred to a client of mine many years ago. The father of my client added my client's name to his savings account for convenience. Dad was getting older and needed help from time to time. The son died unexpectedly and the father found that his savings account was locked up because of a death of a joint owner and the entire value of the account was being included in the son's taxable estate.

We were able to get the account released and removed from the son's taxable estate by proving that the son did not contribute to the account. We were able to prove this by providing bank statements, an affidavit and by proving the account's 1099 was issued in the dad's social security number.

If the son had contributed to the account, it would have been much more difficult to keep the account out of the son's taxable estate.

If you remove your name completely from the bank accounts, the accounts should be excluded from your taxable estate upon your death. However, you should remember that once you remove your name, your son owns the accounts and he can spend them as he sees fit. Also, remember that if the accounts are valued in excess of $12,000, you should file a gift tax return.

Finally, just because you gifted the money doesn't automatically mean it won't be included in your estate. If you die within one year of the date of death, the presumption is that it was a gift made in contemplation of death and it must be included in your taxable estate. Again, this is a rebuttable presumption, but it is up to your son to prove why it should not be included.

Opinions expressed solely are those of the writer. Christopher W. Yugo is a member of the Indiana Bar and a vice president and senior trust Officer for First National Bank's Trust Department. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN, 46321. Yugo's information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planning specialist.