I am not surprised that you cannot find answers easily - you have very technical questions. You do, however, seem to have a good understanding of the situation.

It is treacherous to give this kind of advice without fully working up the family history, the client's wishes, etc. I can provide some general information that may help.

First, let me just point out that your friend's dad is doing what every client does - he is underestimating how fluid and dynamic life can be. Holding property jointly can be a very effective tool to avoid the probate process - provided that the son survives the dad. If the son does not survive the dad, then you have a big mess. Other factors to consider: If the son gets sued (credit card debt, bad mortgage, car accident) then the father's assets are reachable by creditors, and if the son gets divorced (or married and divorced), the you can bet that the divorcing spouse will consider those assets "fair game".

Assuming that the parent is comfortable with the joint ownership approach on the bank account, what has he done with the house? Has he named primary and secondary "Designated Beneficiaries" on the IRA? In some ways this is like trying to compress a two hour estate planning consultation into a couple of paragraphs - which is not really possible.

So to your questions (and remember - all these answers are specific to Massachusetts):

1. There is a rebuttable presumption that the joint account was intended (by the decedent) to pass to the surviving joint owner. The funds become the property of the oldest son at the dad's passing without restriction or obligation. If the son were to share the account, my position has always been that technically he is making taxable gifts to his siblings (because the account belongs to him on his dad's death). So any amount gifted over $13,000 to a sibling in any given year would require a gift tax return. No gift tax may be due - but the son would be utilizing some of his available federal credits. That is another very involved discussion.

2. A joint account is generally considered to be non-probate, unless it was held for convenience purposes only. An interested party has the right to ask the probate court to treat the account as a probate asset (i.e. try to rebut the presumption that the account was intended to pass to the surviving joint owner).

3. The current federal estate tax exemption is $3.5 million dollars, and the current MA estate tax exemtion is $1 million. The calculation of the taxable estate is a little tricky in that it can include assets that most laypersons would not factor in - but those are the filing threshholds.

4. OK - keep in mind that there are multiple types of tax that you have to keep your eye on: estate, gift, and income. In general, assets passing from a decedent to the beneficiaries are NOT subject to any sort of INCOME tax (federal or state). Certain types of assets, however, will create an income tax liability down the road. The best example is the dad's IRA. The children will not have to pay income tax on the IRA right away, but as soon as they start to draw on the IRA they will have to pay income tax on the distributions.

Sorry - I wish I could make this stuff easier - but I hope that helps.

Peter