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Real Estate Tax Problem – Part 1

I wrote two posts last November about a common problem we see.  A real estate transaction is about to close when someone – usually the title company – determines that no one has been appointed as administrator or executor with authority to sign the closing documents on behalf of the deceased owner.

Things, however, can become more complicated when we add estate and inheritance taxes to the mix.   A recent case in our office highlights the problem.  The sale of a home owned in part by a someone who died 30 years ago couldn’t close because the estate administration process had not been completed.

We’ll refer to that owner as “A”.  A died without a will and left an only child, “B”.  B died 15 years later, having never finished estate administration, including transferring title to the property to herself.  B did not leave a will either.  According to New Jersey’s intestacy statute, her estate passed to her half sibling, C (who was not A’s child).  C died 3 years after B with a will leaving everything to a surviving spouse.

While the 3 estate all needed to go thru the estate administration process, the more complicated problem to unwind is estate tax and inheritance tax.  Although none of the estates was large enough to trigger federal estate tax and there is no longer New Jersey estate tax, we still needed to address the tax issue because the title company will not insure the title until we do.  No insurance policy results in no sale.

Next week I’ll explain more.