Taxing Lessons From Court Decisions

Asset Titles and Estate Planning

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T.C. Memo. 2010-26 (Goldberg) highlights the importance of understanding how asset titling can affect estate tax. In this case, Mr. Goldberg’s executor reported ownership of two parcels of New York real estate as if they were held by the decedent as tenants in common with his wife, who died three years earlier. The IRS said the property was held as a tenancy by the entirety.

The difference? In a tenancy by the entirety, which is a type of ownership similar to community property, the entire amount of the land is included in the decedent’s estate instead of only half. At stake for Mr. Goldberg’s heirs: An increase of approximately $380,000 of estate tax.

The court agreed with the IRS.

Taxing Lesson: A review of asset titles is an essential part of financial planning.

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