Creations and Terminations of Joint Tenancies in Real Property When One Spouse is Not a U.S. Citizen
Posted: 6 Dec 2005
The rules surrounding the creation and termination of spousal joint tenancies in real property are unduly complex and sometimes yield perceived inequitable results when one spouse is a non-U.S. citizen. The many amendments to the gift tax marital deduction, the grandfathering of certain gifts upon creation of a joint tenancy, and the application of repealed rules to joint tenancies in real property created today, coupled with the rules applicable to the termination of a joint tenancy in real property, combine to form a system of taxation governing marital transfers that is extremely difficult to synthesize. The application of these rules to the creation and termination of joint tenancies in real property is made more difficult when one spouse is not a U.S. citizen. The rules also result in counterintuitive, seemingly unfair and apparently unintended consequences when the donee spouse predeceases the donor spouse, and/or when the wealthier spouse is a noncitizen. This article outlines the marital deduction rules, QDOT rules, availability of the annual exclusion for gifts to noncitizen spouses and the spousal joint tenancy and contribution rules. The article also demonstrates the complex analysis that must be undertaken to determine the tax ramifications of terminating a joint tenancy in real property, either during life or upon the death of one spouse.
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