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 taxed at different rates, depending on the class.

Parents are considered Class A, which is exempt from inheritance tax.  Non-family members – which includes the partner since they were never married – are Class D and subject to a tax of 15% on the first $700,000 and 16% on anything above that.  The tax is due 8 months after death.  Any unpaid amounts after that deadline accrue interest at 10% a year.

More about that next week.