Generally, co-tenancies with a right of survivorship are included in the gross estate of the first joint tenant to die. This includes joint tenancies, tenancies by the entirety, joint bank accounts, etc. Excluded are forms of co-ownership without survivorship, i.e. tenancies in common, and community property, etc. The estate tax is not limited to the value of the decedent’s undivided interest. Rather, it extends to the full value of the joint tenancy property except what originally belonged to the survivor or was not acquired by the survivor from the decedent for less than full consideration. Likewise, where a joint interest was acquired by gift, bequest, devise, or inheritance from a third party, only the value of the fractional interest of the deceased joint tenant is included in the decedent’s gross estate.
As between a husband and wife the Code provides that for “qualified joint interests” only half of the value of the property is includible in the gross estate of the first to die. A “qualified joint interest” is any interest held by a decedent and the decedent’s spouse that is either: 1) a tenancy by the entirety, or 2) a joint tenancy with right of survivorship, but only if the decedent and decedent’s spouse are the only joint tenants. With regard to community property, each spouse is recognized as having a present, vested, one-half interest in all community assets. Upon the death of either spouse, only the deceased spouse’s one-half of the community property is therefore taxable.
What joint interests are included in the gross estate? was last modified: February 12th, 2021 by David Klasing