If a person buys property and takes title in joint tenancy, is the property taxed in his or her estate at the time of death?
If the joint owners are husband and wife, there is no Federal or Oklahoma Estate Tax due with respect to the joint property at the first spouse’s death. The unlimited marital deduction applies. At the death of the second spouse, the property will likely be subject to Federal Estate Tax, unless it is bequeathed to a new spouse or to a charity, or unless the second spouse’s estate is too small to require payment of Federal Estate Tax.
For non-spousal joint owners, if one of them provides the entire purchase price and that owner dies first, then the full value of the property is included in the estate for tax purposes. If a joint owner who provides none of the purchase price dies first, then the property is not included in the estate. If neither of two joint owners provides any of the purchase price, e.g., where they both received their joint interests by gifts or inheritance, then the estate of the first to die must include half of the property’s value. In all these situations, when the second owner dies owning the property alone, its full value is included in the estate.
In addition, under certain circumstances, the Federal Generation-Skipping Transfer tax may apply to impose an additional tax liability on a deceased joint owner’s estate if the surviving joint tenant is in his or her grandchildren’s generation or in a lower generation, such as great-grandchildren.