Estate Tax Net Exclusion

D L

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Jul 29, 2021, 3:47:55 PM7/29/21

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If there are three joint owners of real estate and one of the dies, does the property get excluded from the gross estate since it was jointly owned by three owners? Thanks.

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Taxed and Spent

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Jul 29, 2021, 8:13:12 PM7/29/21

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On 7/29/2021 12:43 PM, D L wrote:
> If there are three joint owners of real estate and one of the dies, does the property get excluded from the gross estate since it was jointly owned by three owners? Thanks.
>

No. But I like your thinking!

Stan Brown

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Jul 29, 2021, 8:48:14 PM7/29/21

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On Thu, 29 Jul 2021 20:09:40 EDT, Taxed and Spent wrote:
>
> On 7/29/2021 12:43 PM, D L wrote:
> > If there are three joint owners of real estate and one of the
> >dies, does the property get excluded from the gross estate since
> >it was jointly owned by three owners? Thanks.>

> No. But I like your thinking!

Wouldn't that depend on the exact nature of the holding? As I
understand it, though I could be wrong, "joint tenants with right of
survivorship" does exclude the house from the decedent's estate.

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Stan Brown, Tehachapi, California, USA https://BrownMath.com/
https://OakRoadSystems.com/
Shikata ga nai...

Stuart O. Bronstein

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Jul 29, 2021, 8:53:15 PM7/29/21

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D L <debbie.l...@gmail.com> wrote:

> If there are three joint owners of real estate and one of the
> dies, does the property get excluded from the gross estate since
> it was jointly owned by three owners? Thanks.

If you're talking about estate tax (and remember there's a lifetimes
gift/estate tax exemption of $11,700,000 for people who die this year),
the rule is this: the first joint owner to die is presumed to be the
owner of 100% of the jointly owned property, so it's all included in
his estate, except to the extent that the other joint tenant(s) can
show that they contributed to the purchase.

So, for example, if the property was worth $1 million on the date of
death, that's all included in the estate of the first to die, unless
the others prove that they contributed to the purchase. If they can
show that they paid for half the purchase price, then only half the
value is included in the gross estate.

--
Stu
http://DownToEarthLawyer.com

Stuart O. Bronstein

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Jul 29, 2021, 8:58:15 PM7/29/21

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Stan Brown <the_sta...@fastmail.fm> wrote:

> Taxed and Spent wrote:
>> D L wrote:

>> > If there are three joint owners of real estate and one of the
>> >dies, does the property get excluded from the gross estate since
>> >it was jointly owned by three owners? Thanks.>
>
>> No. But I like your thinking!
>
> Wouldn't that depend on the exact nature of the holding? As I
> understand it, though I could be wrong, "joint tenants with right
of
> survivorship" does exclude the house from the decedent's estate.

Actually it's the opposite. As I wrote elsewhere in response to this
question, the entire value of the property is included in the estate
of the first joint tenant to die, unless the other joint tenant(s)
can show that they actually contributed to the purchase. If they
did, then the amount included in the estate would be based on the
percentage the decedent paid toward the purchase.

--
Stu
http://DownToEarthLawyer.com

Taxed and Spent

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Jul 29, 2021, 10:08:18 PM7/29/21

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On 7/29/2021 5:49 PM, Stuart O. Bronstein wrote:
> D L <debbie.l...@gmail.com> wrote:
>
>> If there are three joint owners of real estate and one of the
>> dies, does the property get excluded from the gross estate since
>> it was jointly owned by three owners? Thanks.
>
> If you're talking about estate tax (and remember there's a lifetimes
> gift/estate tax exemption of $11,700,000 for people who die this year),
> the rule is this: the first joint owner to die is presumed to be the
> owner of 100% of the jointly owned property, so it's all included in
> his estate, except to the extent that the other joint tenant(s) can
> show that they contributed to the purchase.
>
> So, for example, if the property was worth $1 million on the date of
> death, that's all included in the estate of the first to die, unless
> the others prove that they contributed to the purchase. If they can
> show that they paid for half the purchase price, then only half the
> value is included in the gross estate.
>

Just to clarify a bit for anyone reading:

OP said "joint owners". That may or may not mean held as "joint tenants
with right of survivorship".

Stuart's replies pertain to the case where the property is held as joint
tenants with right of survivorship.

If OP meant, by "joint owners"m that the property was held as tenants in
common, then the decedent's value in the property is included in
decedent's estate. Decedent's value may be less than his proportionate
share of the value of the property as a whole, due to partnership
discount valuation.

D L

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Jul 30, 2021, 1:08:30 AM7/30/21

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To clarify, property is held as Joint Tenants with Right of Survivorship. If property is held in Joint Tenancy, it moves out of the estate upon death of the person who died. It stands to reason that it should be excluded from the gross estate of the deceased.

Stuart O. Bronstein

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Jul 30, 2021, 1:38:32 AM7/30/21

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D L <debbie.l...@gmail.com> wrote:

> To clarify, property is held as Joint Tenants with Right of
> Survivorship. If property is held in Joint Tenancy, it moves out
> of the estate upon death of the person who died. It stands to
> reason that it should be excluded from the gross estate of the
> deceased.

What's in or out of the probate estate is purely a state law issue and
has nothing to do with federal taxes. You're right, though, that in
many cases when someone has rights in property that terminate on his
death, it is not included in his gross estate. These are referred teo
as "terminable interests." However joint tenancy is not considered a
terminable interest, though it certainly looks like one.

--
Stu
http://DownToEarthLawyer.com

D L

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Jul 30, 2021, 11:54:10 AM7/30/21

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On Thursday, July 29, 2021 at 10:38:32 PM UTC-7, Stuart O. Bronstein wrote:
> D L <debbie.l...@gmail.com> wrote:
>
> > To clarify, property is held as Joint Tenants with Right of
> > Survivorship. If property is held in Joint Tenancy, it moves out
> > of the estate upon death of the person who died. It stands to
> > reason that it should be excluded from the gross estate of the
> > deceased.
> What's in or out of the probate estate is purely a state law issue and
> has nothing to do with federal taxes. You're right, though, that in
> many cases when someone has rights in property that terminate on his
> death, it is not included in his gross estate. These are referred teo
> as "terminable interests." However joint tenancy is not considered a
> terminable interest, though it certainly looks like one.
>
> --
> Stu
> http://DownToEarthLawyer.com

Stu, I was wondering if there is a list of excluded assets from the gross estate. Your point that state laws may come into play is an interesting point which I have not considered yet.

Stuart O. Bronstein

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Jul 30, 2021, 12:29:12 PM7/30/21

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D L <debbie.l...@gmail.com> wrote:

> Stuart O. Bronstein wrote:

>> What's in or out of the probate estate is purely a state law
>> issue and has nothing to do with federal taxes. You're right,
>> though, that in many cases when someone has rights in property
>> that terminate on his death, it is not included in his gross
>> estate. These are referred teo as "terminable interests." However
>> joint tenancy is not considered a terminable interest, though it
>> certainly looks like one.
>

> Stu, I was wondering if there is a list of excluded assets from
> the gross estate. Your point that state laws may come into play is
> an interesting point which I have not considered yet.

The rules of what is included or excluded from the gross estate are
contained in sections 2031 through 2044 of the US Tax Code, which can
be found here:

https://www.law.cornell.edu/uscode/text/26/subtitle-B/chapter-
11/subchapter-A/part-III

Section 2040 has the rule for joint tenancy property.

--
Stu
http://DownToEarthLawyer.com

D L

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Aug 1, 2021, 11:47:06 AM8/1/21

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On Friday, July 30, 2021 at 9:29:12 AM UTC-7, Stuart O. Bronstein wrote:
> D L <debbie.l...@gmail.com> wrote:
> > Stuart O. Bronstein wrote:
>
> >> What's in or out of the probate estate is purely a state law
> >> issue and has nothing to do with federal taxes. You're right,
> >> though, that in many cases when someone has rights in property
> >> that terminate on his death, it is not included in his gross
> >> estate. These are referred teo as "terminable interests." However
> >> joint tenancy is not considered a terminable interest, though it
> >> certainly looks like one.
> >
> > Stu, I was wondering if there is a list of excluded assets from
> > the gross estate. Your point that state laws may come into play is
> > an interesting point which I have not considered yet.
> The rules of what is included or excluded from the gross estate are
> contained in sections 2031 through 2044 of the US Tax Code, which can
> be found here:
>
> https://www.law.cornell.edu/uscode/text/26/subtitle-B/chapter-
> 11/subchapter-A/part-III
>
> Section 2040 has the rule for joint tenancy property.
>
>
> --
> Stu
> http://DownToEarthLawyer.com

Thanks Stu. Your help is sincerely apprecaited.