tag:blogger.com,1999:blog-1335076796987605384.post4931140232586284258..comments2024-01-09T07:23:36.400-05:00Comments on Kevin A. Pollock BLAWG: Deathbed Transfers in New JerseyKevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.comBlogger22125tag:blogger.com,1999:blog-1335076796987605384.post-1237973463774299942017-05-22T11:42:43.569-04:002017-05-22T11:42:43.569-04:00Dear Anonymous of 5/19,
The full amount in the ac...Dear Anonymous of 5/19,<br /><br />The full amount in the account as of date of death should be reported. It is not a gift because she took it after he died.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-79881012648632755792017-05-19T13:43:54.765-04:002017-05-19T13:43:54.765-04:00If a father and daughter are on an account and he ...If a father and daughter are on an account and he dies and within days she withdraws all the money out of the account, then submits a L-8 waiver not including that bank account over 620,000 dollars, Is that account through JTWRS considered a gift and subject to gift tax in the state of NJAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-23397242024501846732016-08-25T18:02:06.311-04:002016-08-25T18:02:06.311-04:00Dear Sandy,
Sorry for the slow reply - somehow th...Dear Sandy,<br /><br />Sorry for the slow reply - somehow this got filtered into a Spam box. Most likely mom did not actually pay any gift tax. She may have allocated some of her exemption to the transfer - if that is the case, the basis in the hands of daughter is simply the $100K. If Mom actually paid any gift tax, it will be the $100K plus actual gift tax paid. She does not receive a step up in basis unless Mom owned it at the time of her death.<br /><br />As a side note, it does not matter that mom died within 3 years of death for this type of transaction. You would get the same result if she had died 50 years later or 1 year later. The federal tax rules apply here to determine a change in basis. The fact that there may be a NJ tax does not change the basis.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-28964774427290678932016-07-14T20:30:30.460-04:002016-07-14T20:30:30.460-04:00Hi, thanks for your article. It's extremely u...Hi, thanks for your article. It's extremely useful. I have one question, hope you can help me out here. Not sure if my previous comment went through. Mother made a gift of a house worth $200k to Daughter one year prior to death with cost of $100k. Daughter's basis will be $100k plus any gift tax paid by Mother. Since mother died within 3 years of the gift, assuming FMV of house on date of death is $200k, the $200k plus the gift tax paid will be included in the gross estate. What is the basis of Daughter on the house? Will it be the "carry over" basis of $100k plus gift taxes or the "step up" basis of $200k on date of death?Anonymoushttps://www.blogger.com/profile/14845689397612024998noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-71052790304397828932016-06-06T10:11:41.830-04:002016-06-06T10:11:41.830-04:00Dear Stephen,
I don't think I have every trul...Dear Stephen,<br /><br />I don't think I have every truly pointed out that there is a massive difference between joint tenants and joint tenants with rights of survivorship. I probably need to write a post on that.<br /><br />If a real estate is owned with rights of survivorship, under section 2040 of the Internal revenue code, the whole thing is presumed to be owned by the parent unless the child can prove otherwise. On the other hand, let's say that dad gifted 50% of the real estate to child (or even 95%) and they did not own it as rights of survivorship, then only what dad kept would be included in his taxable estate at death. <br /><br />As discussed in my post on NJ Deathbed gifting, http://willstrustsestates.blogspot.com/2011/04/deathbed-transfers-in-new-jersey.html , the gift of whatever dad made can be looked at when calculated the NJ estate tax return depending upon when dad dies and how much he has left.<br /><br />To make things more complicated, let's say that dad and child own property with rights of survivorship. If dad gives up survivorship rights, then under Section 2035 of the Code, dad has to survive for 3 years otherwise it is deemed included in his estate.<br /><br />The reason I point to the federal IRS rules is because NJ follows the federal rules on what is includible.<br /><br />Like I said. This topic requires a complete post.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-10678705190300714082016-06-05T19:24:39.655-04:002016-06-05T19:24:39.655-04:00For the purposes of a New Jersey Estate Tax Return...For the purposes of a New Jersey Estate Tax Return, if a father and daughter are co-owners of real estate, but the daughter neither contributed funds for the purchase nor for any monthly condo payments or maintenance, does the father own 100% of the asset, or just 50%. Is this similar to the previous example of the joint ownership of a bank account where only the father contributed funds? Thank you for considering this question to help clarify the situation.Stephennoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-90019147153866835552016-04-11T18:23:20.626-04:002016-04-11T18:23:20.626-04:00Dear Anonymous of 4/5,
I know, I know. I'll t...Dear Anonymous of 4/5,<br /><br />I know, I know. I'll try to get around to the Advanced Article. What I can promise you though is that if you run the numbers on the 2001 706 and plug them in on column B, you'll see how it works. It's just very difficult to explain verbally which is why I haven't gotten around to writing the article.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-52711164324491595522016-04-05T18:49:38.708-04:002016-04-05T18:49:38.708-04:00Did you ever write your "Deathbed Transfers i...Did you ever write your "Deathbed Transfers in New Jersey - Advanced" article? I am having trouble figuring out how the estate tax is different in situations where its the look back amount that puts you over the $675,000 cap.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-37517511764185673832016-04-04T14:23:56.790-04:002016-04-04T14:23:56.790-04:00Dear Anonymous of 3/31/16,
Generally your analysi...Dear Anonymous of 3/31/16,<br /><br />Generally your analysis is correct. Keep in mind though that technically the Column A method is simplified method that the NJ Division of Taxation and Column B is the true method for calculating the taxes. So it is possible that NJ can come back later and say that you can't use the Column A method. (From experience, I have had them tell me there is a tax on estate, for which there was none, but the amount was so small it would have cost more in legal fees to challenge than to pay the darn fee.)Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-29305427569397501042016-03-31T20:50:59.307-04:002016-03-31T20:50:59.307-04:00One last point. If lifetime exemption gifts have ...One last point. If lifetime exemption gifts have been given, it is better to use the Column B method for the three years following to reduce that amount NJ Estate due, compared to the Column A method? Three years after a lifetime exemption gift has been given, it is better to use Column A, assuming all other factors are equal. If, after this three year period, assuming no other gifting, if an estate is below 675K, then no NJ Estate tax would be due.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-52561971205667104642016-03-31T20:45:13.302-04:002016-03-31T20:45:13.302-04:00Got it. Thank you for being so generous with your ...Got it. Thank you for being so generous with your knowledge and timeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-69872607042570399872016-03-29T14:39:45.590-04:002016-03-29T14:39:45.590-04:00Dear Anonymous of 3/22,
You are correct that on l...Dear Anonymous of 3/22,<br /><br />You are correct that on line 6b you do not included annual exclusion gifts because they are not taxable gifts. It does not matter when the annual exclusion gifts where made. This is why if a person made an annual exclusion gift within 3 years of dying it is better to use Column B than Column A.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-4536682467261891842016-03-29T14:35:09.579-04:002016-03-29T14:35:09.579-04:00Abby,
A gift is not complete in this scenario unt...Abby,<br /><br />A gift is not complete in this scenario until the daughter withdraws money from the account for NJ and federal estate tax purposes. Accordingly, the lookback (3 year or forever depending upon whether you use Column A method or Column B method), does not apply. <br /><br />You are technically correct that the 3 year lookback is primarily for the inheritance tax, but the NJ division of tax also uses a 3 year lookback on the NJ estate tax return for all gifts made within three years of death if you choose the Column A method for filing the NJ Estate Tax Return. While the column B method is a forever lookback, it does not count smaller gifts (the annual exclusion amount or smaller). So the answer can be quite tricky!Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-50982682885190416622016-03-23T15:14:06.940-04:002016-03-23T15:14:06.940-04:00If the father and daughter are joint owners on an ...If the father and daughter are joint owners on an account, can't the daughter (with the father's permission since it was his money) move the money into a separate account in her name only to get the money out of his estate for NJ estate tax purposes? Since the daughter is a Class A beneficiary, the transfer wouldn't be subjected to the three year look back for NJ inheritance tax purposes, and for NJ estate tax purposes, there is no 3 year look back. Correct?Anonymoushttps://www.blogger.com/profile/16080492913495397984noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-59883810399323116802016-03-22T20:52:20.186-04:002016-03-22T20:52:20.186-04:00Thank you for clarifying these issues. Do I under...Thank you for clarifying these issues. Do I understand correctly that annual exclusion are not included in Line 6 - Adjusted taxable gift on Form 706, even if they were within the previous three year period? Or only if it has been more than three years?<br />Sincere thanks for your help.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-74538207913510356402016-03-17T10:08:11.254-04:002016-03-17T10:08:11.254-04:00Dear Anonymous of 3/14,
If assets are owned by a ...Dear Anonymous of 3/14,<br /><br />If assets are owned by a father and daughter, the federal government and NJ treat it the same way - whoever dies first must include the entirety of the joint asset in his/her estate UNLESS they can prove that the other person paid for it. So, in your situation, father is still alive and no money has been withdrawn, therefore there is no complete gift. If daughter withdraws the money, that is what completes the gift and starts the look-back period.<br /><br />Annual exclusion gifts are NOT treated the same as lifetime exemption gifts because they do NOT reduce your lifetime exemption. That is often the biggest reason to use the Column B method instead of the column A method.<br /><br />As far as I am aware, gifts to a 529 are considered gifts to the beneficiary.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-33418470534257429592016-03-14T14:15:15.690-04:002016-03-14T14:15:15.690-04:00Thank you for this informative and helpful article...Thank you for this informative and helpful article. I would like to know are financial assets co-owned by a father and daughter treated for New Jersey Estate Tax purposes, assuming no Federal Estate Tax Return or New Jersey Inheritance Tax Return has to be filed? The father has contributed all the funds to the account over a period of years and no funds have yet to be withdrawn. If these deposits occurred with the past three years, does the father just report 50% of the assets on his return or 100%? If contributions to the account were made more than three years ago, could these be considered a gift to the daughter and not be included in the father's estate return?<br /><br />In reference to the filing of a New Jersey Estate Tax return when a federal estate tax return is not required, using the Form 706 method to take advantage of a gifting program, are annual exclusion gifts treated the same as lifetime exemption gifts? Are annual exclusion gifts included in Line 6 - Adjusted Taxable Gifts if they were given within the past three years? More than three years ago? Are lifetime taxable gifts always included in Line 6? <br /><br />Finally, are annual exclusion gifts to a grandchild's 529 plan owned by the daughter considered a gift to the beneficiary or the owner?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-2198938278365001602016-01-17T15:14:24.517-05:002016-01-17T15:14:24.517-05:00Thanks for your response. I can see where things c...Thanks for your response. I can see where things could get very complicated. In this particular case the gifts would be made equally to those people mentioned in the Will. The intent is to reduce NJ Estate taxes and at the same time to abide by the wishes of the parent as stated in the Will.Paulnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-34083933260055140882016-01-08T11:31:33.015-05:002016-01-08T11:31:33.015-05:00Dear Paul,
A who book could probably written abou...Dear Paul,<br /><br />A who book could probably written about this topic. There is a major difference between the legality of what someone does, the tax implications of what someone does, and the mechanics of whether something can be done.<br /><br />Just because a parent puts another person's name on an account does not mean that it gives the other person the right to take the money. Technically it is about the intent of the person who funded the account. <br /><br />As a practical matter, once you put someone else on the account, from a mechanical perspective, the new person can then drain the account (via check, wire or otherwise). Depending upon the intent of the person who funded this account, this could be seen as a gift or fraud.<br /><br />So I recommend establishing a clear understanding of the purpose of the joint account, especially if there are other relatives and especially if "gifts" will not be made equally.Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-66814854378082168092015-12-22T12:25:22.364-05:002015-12-22T12:25:22.364-05:00Thanks for all the posts in your bLAWg. One questi...Thanks for all the posts in your bLAWg. One question coming to mind in the implementation of this strategy is as follows: A NJ parent has a joint account with an adult child of theirs. The funds in the account are the parent's. Can the child make gifts from the joint account for the parent (for convenience)? This could take place by using a check signed by the child or an online transfer from the child's online access to the account. IRS form 709 will be submitted showing the gift coming from the parent.Paulnoreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-78940881084542641832014-11-17T17:08:37.370-05:002014-11-17T17:08:37.370-05:00Dear Anonymous of 11/13/14,
Thanks for the constr...Dear Anonymous of 11/13/14,<br /><br />Thanks for the constructive feedback. I corrected the article. Kevin A. Pollock, J.D., LL.M.https://www.blogger.com/profile/08329649326376128858noreply@blogger.comtag:blogger.com,1999:blog-1335076796987605384.post-531407148900966512014-11-13T21:19:52.439-05:002014-11-13T21:19:52.439-05:00"Class C beneficiaries include the decedent&#..."Class C beneficiaries include the decedent's brother or sister and son-in-law or daughter-in-law of the decedent if the decedent's child is also deceased". <br /><br />In your article it sounds like a son-in-law or daughter-in-law are Class C beneficiears ONLY if the decendent's children are deceased. But son-in-law and daughter-in-law are Class C dependents...period. <br /><br />Thanks<br /><br />Great articleAnonymousnoreply@blogger.com