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<<Roy,

I think we are arriving at different conclusions on the same issue.

In the situation presented (Dad creates JTWROS in real estate with Son, Son doesn't pay anything for it), it doesn't matter whether the gift on creation of the JTWROS was reported or not. The result is the same. 100% inclusion in Dad's estate.

You seem to be saying - and please correct me if I'm wrong - that if the gift was reported, then only 1/2 is included and you have managed to get some gift and estate tax benefit out of the gift, i.e., you got half the post-gift appreciation out of the estate. The 1/2 inclusion rule only applies to joint tenancies between spouses. That's not what happens with joint tenancies between non-spouses where the donee contributed nothing toward the consideration. Whether the gift was reported or not, the value of the entire property is 100% included in Dad's estate. As I mentioned in my previous post, this kind of planning does nothing for estate and gift tax purposes and even worse, it wastes the donor's $10,000 annual exclusion for the donee in the year of the gift.

If there is no taxable estate, then "no harm, no foul," in a sense, because 100% inclusion means that the property gets a full step-up in basis. But from an asset protection perspective, it's generally not a good idea.

Chris Riser>>

O.K., I must be missing something here. I think you're telling me that the proper approach is filing of a gift tax return at the time the joint tenancy is created. In my example, the house is worth $200,000, so $100,000 (or $90,000) of the unified credit is used up upon filing the gift tax return. Right so far?

You are saying that when the parent dies, the property is 100% includable in the parent's taxable estate, despite the earlier gift tax return filing. In my example, the house has grown to a value of $300,000. So, a further $300,000 of the unified credit is used up. Therefore, the total amount of the unified credit that has been used is $400,000 (or $390,000), on a house that was never worth more than $300,000. Can this possibly be right?

Walter
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