W. Va. Code R. § 110-11-3

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-11-3 - Jointly Held Property

3.1. General. The entire value of any property owned by a decedent or to which he was absolutely entitled, and which he has transferred or vested, or caused to be transferred to or vested in himself and any other person jointly, with right of survivorship, in whole or in part, in such other person, shall be subject to inheritance tax except as otherwise herein provided. This ruling applies to any form of joint ownership of real or personal property where each co-owner has a joint interest of any kind during their joint lives and where the surviving co-owner takes the whole estate, including common law joint tenancies, "joint tenancies with right of survivorship", joint accounts held in "A or B form and "A or B or the survivor" form, and any other form of ownership where requirements of this Section 1 of this ruling are satisfied regardless of how many persons may have joint interests in the property in question. The term "joint tenants with the right of survivorship" is used herein for convenience, and includes all forms of ownership of property which are subject to provisions of this ruling. This ruling does not apply to tenancies by the entirety, and no position is taken in this ruling either on the question of the existence of the estate of tenancy by the entirety in the State of West Virginia or on the question of the application of the inheritance tax to the transfer of property so held. This ruling does not apply to undivided interests in property held by a decedent as a tenant in common or in some other form of ownership where the surviving co-owner takes nothing by survivorship.

Example 1. "A", during his lifetime caused Blackacre, wholly owned by him, to be transferred to himself and "B", his son, as joint tenants with right of survivorship, without consideration by "B". Thereafter, "A" died while Blackacre was still held in such form. The whole value of Blackacre is subject to inheritance tax at "A's" death. The same result would follow if "A" paid the entire consideration for the purchase of Blackacre and caused the seller to convey it to himself and "B" as joint tenants with right of survivorship. The same result would also follow if the transfer was made or caused by "A" without consideration to "A" and his sons "B", "C" and "D", with right of survivorship among the four (4) co-tenants, and "A" died while Blackacre was so held.

Example 2. "H", purchases United States Savings Bonds, of any series, causing them to be issued and registered in the names of "H" and "W", husband and wife. The case value of the bonds on the date of "H's" death is subject to tax as provided herein subject to the provisions of Sections 3.2, 3.3, and 3.4 of this regulation, in the case of decedents dying on or after September 15, 1966.

3.2. Consideration by survivor. When the survivor of two or more joint tenants has provided any part of the consideration for the purchase or acquisition of property held in joint tenancy with the right of survivorship, a proportionate part of the value of the property will be exclude in the application of the inheritance tax. In any case in which it is claimed that the survivor furnished part of the consideration hereunder, the person whose duty it is to pay the inheritance tax thereon shall have the burden of proving to the Commissioner the amount of such consideration furnished by or attributable to the survivor.

Example 1. "A" and "B", brothers, own property as joint tenants with right of survivorship valued at thirty thousand dollars ($30,000) at the death of "A". It is proved to the Commissioner that the property was purchased for twenty thousand dollars ($20,000), and that "A" provided fifteen thousand dollars ($15,000) and "B" five thousand dollars ($5,000). Three-forths (3/4) of thirty thousand dollars ($30,000) or twenty-two thousand five hundred dollars ($22,500) is subject to inheritance tax at "A's" death.

3.3. Aquisition by gift or inheritance. In any case where property has been acquired by decedent and another as joint tenants with the right of survivorship by gift or inheritance from a third party, no part of the value of such property is subject to inheritance tax upon the death of the first of such joint tenants to die.

3.4. Husband and wife. In the case of decedents dying on or after June 3, 1957, where the decedent and his or her surviving spouse hold property as joint tenants with right of survivorship, not more than fifty percent (50%) of the value of such property shall be subject to the inheritance tax.

Example 1. "A" and "B", husband and wife, own real property valued at "A's" death at twenty five thousand dollars ($25,000) as joint tenants with right of survivorship, for which "A" provided the entire purchase price. At "A's" death, one half of the value of the property, or twelve thousand five hundred dollars ($12,500), will be subject to inheritance tax. (See Section 3.5, Example 1, hereunder with regard to joint accounts in the name of husband and wife.)

Example 2. The facts are the same as in Example 1, except that it is proved to the commissioner that "B" provided five thousand dollars ($5,000) of the cost of the property, purchased for a total of twenty thousand dollars ($20,000) with money inherited by her from her parents. One fourth (1/4) of the value of the property at "A's" death, or six thousand two hundred fifty dollars ($6,250), is excluded because of consideration furnished by the surviving spouse; one half (1/2) of the remaining eighteen thousand seven hundred fifty dollars ($18,750), or nine thousand three hundred seventy-five dollars ($9,375), is excluded under the fifty percent (50%) exclusion provided for jointly held property in the name of husband and wife; the remaining nine thousand, three hundred and seventy-five dollars ($9,375) is subject to inheritance tax at "A,s" death.

3.5. Joint Accounts.

(a) In General. Amounts on deposit in joint checking and savings accounts in any bank, federal savings and loan associations or building and loan associations in the name of a decedent and another, where either party may withdraw funds from the account upon his sole signature for his or her own use, and where the whole balance on deposit at the death of either vests in the survivor, are wholly subject to inheritance tax upon the death of the first of such depositors to die, except as otherwise provided herein.

(b) Exemptions for Accounts in Name of Husband and Wife. A maximum of fifty percentum (50%) of the aggregate amount of joint accounts in the name of husband and wife (in "A or B" or "A or B and the survivor" or similar form) is subject to inheritance tax upon the death of the first to die of such husband and wife.

(c) Two thousand, five hundred dollar ($2,500) Exemption. An aggregate of two thousand, five hundred dollars, ($2,500) on deposit in joint accounts in "A or B" or "A or B and the survivor" or similar form, in the name of a decedent and his or her spouse, parent, child, step-child or the decedents of a living or deceased child is exempt from inheritance tax. Where a decedent maintained joint accounts subject to tax hereunder with more than one person within the degree of relationship qualifying for the two thousand, five hundred dollar ($2,500) exemption, the exemption will be prorated among the various accounts in proportion to the amount of deposit and various accounts in proportion to the amount of deposit and subject to tax (before application of any exemption) in each account.

(d) Contribution by Survivor. A portion of any joint account subject to tax hereunder is exempt from inheritance tax to the extent that it is proved to the Commissioner that survivor was the source of or actual owner of funds in the account.

Example 1. "H and W" husband and wife, have accounts amounting to a total of twenty thousand dollars ($20,000) in various banks in the form "H and W" or "H or W or the survivor". In the absence of proof of contribution by the survivor or ownership of any portion of the account by the survivor or ownership of any portion of the account by the survivor or another person, a total of ten thousand dollars ($10,000) of such accounts is exempt from tax under the exemption provided for property held in the name of husband and wife, as joint tenants with right of ownership; two thousand, five hundred dollars of the remainder is exempt from tax; seven thousand, five hundred dollars ($&,500) of such accounts is subject to the inheritance tax.

Example 2. The facts are the same as in Example 1, except that the twenty thousand dollars ($20,000) is on deposit in a single account and it is proved that "W" contributed five thousand dollars ($5,000) out excluded; one half of the remaining fifteen thousand dollars ($15,000) or seven thousand, five hundred dollars ($7,500) is exempt from tax under the exclusion for property held in the name of husband and wife as joint tenants with right of survivorship; two thousand, five hundred dollars ($2,5000) of the remainder is exempt from tax; five thousand dollars ($5,000) of the account is subject to the inheritance tax.

Example 3. At the date of his death "A" was shown as a co-depositor on the records of various banks as follows "A or B" (A's wife ten thousand dollars ($10,000); "A or C" (A's son) five thousand dollars ($5,000); "A" or D" (A's nephew) five thousand dollars ($5,000) as the account in the name of "A or B" is exempt from inheritance tax under the exemption for property held in the name of husband and wife, as joint tenants with right of survivorship. The two thousand, five hundred dollars ($2,500) exemption is prorated between the accounts passing to the wife "B" and the son "C"; no part of the two thousand, five dollars ($2,500) exemption id prorated to the account in the name of "A" and his nephew "D", because "D" is not within the necessary degree of relationship with "A" to qualify for the exemption. 10,000/15,000ths of the two thousand, five hundred dollar ($2,5000) exemption, or one thousand, six hundred and sixty-six dollars and sixty-seven cents ($1,666.67), is allocated to the "A or B" account and 5,000/15,000ths of the exemption, or eight hundred and thirty-three dollars and thirty-three cents is allocated to the "A or C" account. Thus only three thousand, three hundred and thirty-three dollars and thirty-three cents of the account in the name of "A or B" is subject to the inheritance tax and four thousand, one hundred and sixty-six dollars and sixty-seven cents ($4,166.67) of the account in the name of "A or C' is subject to tax. The entire five thousand dollars ($5,000) on deposit in the account in the names of "A or D" is subject to tax.

3.6. Ownership of Property. In any case where property is held in joint tenancy with right of survivorship, or similar form of title, and real or beneficial ownership of such property is otherwise than that indicated by such form of title, real or beneficial ownership shall be controlling in the determination of application of the inheritance tax.

Example 1. A bank account in the names of "A" or "B" contained a balance of ten thousand dollars ($10,000) at the death of "A". The entire balance belonged to "A", the account having been established in "A or B" form only for the convenience of "A", so that "B" might draw funds on the account for purposes designated by "A" or for A's benefit. As a result, A's executor has the right to receive the balance. The balance in the account is wholly subject to inheritance tax and does not qualify for the fifty percent (50%) and two thousand, five hundred dollars ($2,500) exclusions, regardless of the relationship between "A" and "B".

3.7. Jointly Held Property Subject to Debt. In any case where property held by a decedent and another as joint tenants with right of survivorship is subject to a lien to secure for a debt, that is, where such property is pledged as security for a debt, the amount which is deductible in computing the inheritance tax depends upon the ultimate incidence of legal liability for payment of such debt. The deductibility of the debt is not affected by the fact that a portion of the property securing such debt may be excluded from taxation under a particular provision of law, such as the provision excluding a maximum of fifty percent (50%) of property held by husband and wife as joint tenants with right of survivorship.

Example 1. "H and W", husband and wife, purchased property for use as a personal residence, "H" providing funds for payment of one half of the purchase price and the remaining one half being financed by a loan secured by lien on the property. Title was taken in "H and W" as joint tenants with right of survivorship, and both "H and W" executed the promissory note evidencing the loan. Payments were made on the loan by "H" during lifetime, but "H" died before the debt was entirely paid. One-half of the total value of the property is subject to inheritance tax a H's death, the other half being excluded under the fifty percent (50%) exclusion provided for jointly held property owned by husband and wife. In the usual case one half of the debt will be allowable as a deduction for inheritance tax purposes. The same portion of the debt will be deductible if "H and W" are not husband and wife, or if "W" provided part of the consideration for purchase of the property, or if payments on the the loan are made out of W's separate funds. However, if the ultimate legal liability for payment of the entire amount of the debt is on H's estate, and H's estate is actually subjected to payment of the whole amount of the debt, then the entire amount of the debt is deductible for inheritance tax purposes.

W. Va. Code R. § 110-11-3