Legal Question in Wills and Trusts in California
Impact of Legal Separation on Estate Tax
My parents were legally separated in 1994 after 40 years of marriage. Per the judgement, my father remained in the family home until he passed away early this year. Title to the house is in joint property and will go to my mom. Question: do I need to inlcude any or all of the value of the house in valuing my father's estate for estate tax purposes or can it be excluded under the marital deduction?
Thank you!
3 Answers from Attorneys
Re: Impact of Legal Separation on Estate Tax
The marital deduction applies if they were still married, so it will apply here unless there was a decree of dissolution of marriage.
For 2002, estates under $1,000,000 in value owe no estate tax, so a 706 estate tax return may not even be necessary if the estate was well below that value (but check with your tax advisor first!).
Re: Impact of Legal Separation on Estate Tax
If there was no decree of dissolution on the marriage, then any property going to the spouse is covered under the unlimited marital deduction. There is no estate tax until you get to $700,000 of value, so you want to see if there is any estate tax at all.
Re: Impact of Legal Separation on Estate Tax
Your email indicates that there was a judgment. If this is a judgment for dissolution of the marriage, the marital deduction does not apply, because there was no marriage at the time of death. However, if there was no judgment for dissolution, the property passing to the spouse may qualify for the marital deduction.
If you father died in 2001, the exemption amount was $675,000 (not $700,000); If your father died in 2002, the exemption amount is $1,000,000.
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