3.) A parcel of joint tenancy real property owned by Parent and Child was worth

Question

3.) A parcel of joint tenancy real property owned by Parent and Child was worth $25,000 at its acquisition in 1995 and $50,000 at decedent's death. What is the result under Section 2040 in the following situations?

a.) Parent paid the full $25,000 purchase price; Parent predeceases Child.

b.) Parent paid the full $25,000 purchase price; Child predeceases the Parent.

c.) Parent and Child each contributed $12,500 of the purchase price; Parent predeceases Child.

d.) Parent contributed $15,000 of the purchase price and Child contributed $10,000; Parent predeceases Child.

e.) Grandparent devised the property to Parent and Child as joint tenants; Parent predeceases Child.

f.) What would the results be in questions (3)(a), (3)(b), and (3)(d) above, if joint tenants were spouses, not Parent and Child?

Explanation / Answer

According to Section 2040.

a) If parent paid full $25000 as consideration and parent predeceases child i.e. parent dies before child than the $ value of property ($50000) will be included in the gross estate of parent as he has paid the acquisition price.

b) If parent paid full $25000 as consideration and child predeceases parent i.e. child dies before parent than also the value of property will be included the assets of the parent not of child because parent has paid full consideration. It Is not included in the gross estate of the child

c) As parent has paid $12500 i.e half of the consideration and he dies before child half the current value of property will be included in his (parent) gross estate.

d) As parent has paid $15000 i.e 60% (15000/25000*100) of the consideration and he dies before child 60% value of property (i.e. $50000*60%= $30000 will be included in parent gross estate.

e) Grandparent devised the property to parent and child and parent dies before child than half of the current value of the property will be included in parent gross estate.

f) If they are spouse and husband is the parent and wife is spouse

1) If parent paid full $25000 as consideration and husband predeceases spouse i.e. husband dies spouse child than the $ value of property ($50000) will be included in the gross estate of husband as he has paid the acquisition price.

2) If parent paid full $25000 as consideration and spouse predeceases husband i.e. spouse dies before husband than also the value of property will be included the assets of the husband not of spouse because parent has paid full consideration. It Is not included in the gross estate of the spouse(wife).

3) As husband has paid $15000 i.e 60% (15000/25000*100) of the consideration and he dies before spouse 60% value of property (i.e. $50000*60%= $30000 will be included in husband gross estate.

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