Selling Real Estate of a Deceased Owner (Part 3)
In this third post of three I continue with the story of a call we received about an unmarried couple who owned real estate together. The woman passed away first and a year later the man died. As I explained last week, the administrator of the man’s estate found a buyer for the home fairly quickly, however, I expected that I would need to work with both real estate attorneys and the buyer’s title insurance company to get the sale to close. That’s because the title company wants to be sure there aren’t any liens for unpaid inheritance taxes before it agrees to insure the title to the property against all outside interests. While we were able to quickly file an inheritance tax return and pay the tax with respect to the 1/2 interest the woman left to the man, it takes at least a few months for the State to process the return and issue a tax waiver releasing the lien it automatically has by law on New Jersey property. The man’s return would be more involved since he left all his assets to his siblings who are Class C beneficiaries. In this case the tax would be 11% on amounts each sibling receives above
Selling Real Estate of a Deceased Owner (Part 2)
In my post last week, I told you about a call I received about an unmarried couple who owned a home together. The woman had died a year before the man. I explained that New Jersey has an inheritance tax that is payable 8 months after death. The tax is based on the relationship of the heirs to the person who died. Class A beneficiaries are exempt from the tax, which includes spouses, parents, children and grandchildren. That is why many, but not all, estates are exempt from inheritance tax. In this case, the woman who died left everything to her parents except for her share of the home which she left to her partner. That was the only asset that was subject to inheritance tax. The State, automatically by law, has a lien on New Jersey real estate and funds in New Jersey financial institutions when a person dies. The State releases its lien by issuing a tax waiver. This waiver is generated when an inheritance tax return is filed and the correct amount of tax paid. In certain instances in which no inheritance tax is due, an affidavit can be submitted to the State requesting the waiver without the requirement to file the tax return. In this case an inheritance
Selling Real Estate of a Deceased Owner (Part 1)
I have written several blog posts about problems that arise when selling the real estate of a deceased owner. Here is another one that came to our office. An unmarried couple purchased a home together, which they held as tenants in common. While they referred to each other as fiancées, they never did in fact marry before the woman died. Property held by co-owners as tenants in common means that each co-owner’s 50% share does not automatically pass to the surviving co-owner. The property interest passes according to the last will, if there is one, or according to intestacy laws if there is no will. In this case the woman had executed a will before she died. It provided that her share of the home be left to her partner but the rest of her estate she left to her parents. She did not choose her partner as the executor of her estate. Instead she chose one of her parents. As I have written about in past blog posts, New Jersey eliminated its estate tax 6 years ago but we still have an inheritance tax. The tax is based on the relationship of the heirs to the person who died. Some classes of heirs are exempt from the tax and others are
Estate Administration – Do It Yourself or Not (Part 2)
In my blog post last week, I began a discussion about what role an attorney can play in the estate administration process. More specifically, how much involvement we have in any case depends on the complexity of the matter and how much our clients want to take on themselves. As I explained last week, the first step in the process is for an estate representative to be appointed to deal with assets and debts of the decedent. When a will exists which designates an executor, the appointment process, while a bit more complicated now than was the case before Covid, is still simpler than when no will exists. In that case, New Jersey law lists the order of priority of person entitled to serve as estate representative based on family relationship to the decedent (the person who died). The first in line to serve (called an administrator when there is no will) is the decedent’s spouse or domestic partner. If none is willing to serve, next in line are the remaining heirs. That would be direct descendants first if there are any (ie. children, grandchildren). When there is more than one child, each has equal right to serve. Any of them can decline to serve by signing a renunciation,
Estate Administration – Do It Yourself or Not?
A common question I am asked when talking to someone about hiring us to help with estate administration after a loved one dies is whether they need the assistance of an attorney or not. My general answer is that it depends on the specifics of the particular matter as well as on how much the estate representative wants to handle him or herself. More specifically, with the exception of certain tasks which cannot be delegated, as attorneys we can handle as much or as little of the estate administration process as a client desires. Only the estate representative , for example (ie. Executor or Administrator), can open an estate bank account, sign checks drawn against this account and close out and withdraw funds from accounts in the name of the decedent (person who died). For most tasks required to administer an estate, however, the estate representative can either take a “do it yourself” approach or seek professional assistance. It really depends on the level of complexity. Let’s start from with the beginning of the estate administration process. If I pass away owning assets and I have bills to pay, the first question is “who can access my accounts?” A second question is what happens to my assets, meaning
2025 Estate Tax Changes
In my last blog post of 2024, I discuss changes to estate and gift taxes for 2025. As with Social Security and the Medicaid and VA programs which I have already detailed here in past weeks, inflation adjustments have changed some numbers applicable to estate and gift taxes. Estate tax is due on certain individual’s estates after they die. While New Jersey does not currently have an estate tax (we do still have an inheritance tax), federal estate tax still exists for estates over a certain size. For persons dying in 2025, only estates over $13,990,000 are subject to federal estate tax up from $13,610,000 in 2024. I should note that the current estate tax law is set to expire at the end of this year. Unless the incoming Congress and president agree to extend the law, when it “sunsets”, the old law will come back with the exemption cut in half. While many believe the law will, in fact, be extended, we should know for certain sometime before the end of next year. The annual gift tax exemption is also set to be bumped up. In 2024 one could gift up to $18,000 per person per year without either paying gift taxes or using a part of the