Legal Question in Wills and Trusts in New Jersey

My 80 yr old aunt(my mom's sister) is sick in the hospital and it is not looking good god bless her i really hope she pulls through this one!! She is unable to sign documents as she is on a respirator. I have a few questions, first off, we are talking about the state of New Jersey. I have/am her durable/general power of attorney. I am also the executor of her will and the only beneficiary to her entire estate (less than $300,000) Should I add my to the deed of her New Jersey home or wait for her to pass upon which i will inherit the house. I was under the impression that if my name is on the deed the house would legally be 1/2 mine which I would suspect reduce my tax burden or i would inherit the entire house upon her death. I was under the impression because i am a class d beneficiary the state of New Jersey will charge 15% estate tax on her entire estate. My other possible options would be to transfer ownership solely into my name (either gift it or buy it for one dollar) What would be the implications of removing her from the deed/gifting me the house.

Asked on 6/21/13, 3:01 pm

2 Answers from Attorneys

Kevin Pollock Law Office of Kevin A. Pollock LLC

I very sorry to hear about your aunt. I hope she pulls through. Unfortunately, there is no inheritance tax benefit to retitling the house unless you transfer the whole thing to your name AND she survives for three years. NJ pulls back gifts to Class D beneficiaries if they are made in contemplation of death (3 years is presumed to be in contemplation of death).

Also, if a house is jointly owned with someone else (other than a spouse), NJ presumes that the decedent owned the whole thing unless the surviving owners can prove that they paid for part of it. So again, no benefit to changing title.

Finally, gifting the whole thing now would be bad in that you wouldn't receive a step-up in basis when you sold it, resulting in a capital gains tax.

Best to your aunt.

Kevin A. Pollock, J.D., LL.M.

P: (609) 818-1555

Licensed to practice law in Florida, New Jersey, New York and Pennsylvania.

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The foregoing is offered for informational purposes only and is not legal advice nor does it create an attorney-client relationship. To indicate that you have read the answer it would be appreciated if you would check either the thumbs up or thumbs down box below. Circular 230 Disclosure: Any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

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Answered on 6/21/13, 3:32 pm

Walter LeVine Walter D. LeVine, Esq.

I agree with Kevin, even if a gift tax return were filed. The potential capital gain tax is anticipated to be increased and already has been depending upon your annual income. Of course, the inheritance tax will be due upon your aunt's death, while the capital gain tax would not be due until you ultimately sold it, which might be many years from now if you were to use it as your principal residence. Rates could again change over time, so you need to consider the tax ramifications of several alternatives.

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Answered on 6/21/13, 7:24 pm

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