MARCH 21, 2016

TITLE TRENDS – Federal Estate Tax

Q – Why is the following requirement/exception sometimes listed as a requirement/exception on my commitment for decedents in my chain of title?

“Possible Federal estate tax due the United State of America by Estate of ….”

A – Internal Revenue Code Section 6324 provides that on the day someone dies a Federal estate tax lien comes into existence without the need to actually file a lien in the appropriate public record. It is valid for 10 years, with a 30 day window to perfect the lien in the public record. Thus, any property that has an Estate in the chain of title within the last 10 years, 30 days is subject to the lien, and the Commitment to Insure will raise the possibility of Federal estate tax being due. The tax is calculated on the net value of the Estate.

The net value of an Estate is calculated on the fair market value of everything in the decedent’s estate less approved deductions (e.g., mortgages and other debts, estate administration expenses, charitable donations, property passing to a surviving spouse, etc.) and the unified credit or basic exclusion for the year of death. The unified credit/basic exclusion varies annually and any Estate valued at less than the exclusion amount is not subject to Federal estate tax:

Exclusions

Often times you can determine if Federal estate tax is due by reviewing your State’s inheritance and/or estate tax return. If the Federal estate tax is due, please contact your local underwriter to determine the necessary steps required to have the property released.

Written by: Moira E. Hogan Senior Underwriting Specialist

2006, 2007, 2008 - $2,000,000 2009 - $3,500,000

2010 – unlimited (no estate tax assessed) 2011 -$5,000,000

2012 - $5,120,000 2013 - $5,250,000

2014 - $5,340,000 2015 - $5,430,000

2016 - $5,450,000

Questions? Please contact your local underwriting counsel. Contact information is on our website: www.TitleResources.com

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