Chapter 3: Types of Property Interests

Question 0

Ancillary Probate

Answer 0

Concurrent second probate process conducted in a non-domiciliary state in which the decedent owns real property, which often requires the services of an attorney from that state, and separate court fees.

Question 1

Actual Contribution Rule

Answer 1

The value of the decedent’s joint interest in property is based on the actual percentage of the original purchase price contributed by the decedent - not the decedents ownership percentage

Question 2

Community Property

Answer 2

A regime in which married individuals own an equal undivided interest in all of the property accumulated, utilizing either spouse’s earnings, during the marriage.

• 2 owners (spouses)
• Need consent of spouse to transfer
• No automatic survivorship feature
• 50% of FMV included in gross estate
• 50% of FVM included in probate estate

– Income Tax Basis of heir: spouse retains 50% FMV interest; if spouse receives property then plus amount included in decedents gross estate; if heir is someone else then it would only be the amount included in decedents gross estate

Question 3

Equitable Ownership

Answer 3

Possession of the economic right to property.

Question 4

Fee Simple

Answer 4

The complete individual ownership of property with all the rights associated with outright ownership.

• Only 1 owner
• Right to transfer freely
• No automatic survivorship feature
• 100% included in gross estate
• 100% included in probate estate

– Income Tax Basis of heir: full FMV

Question 5

Intangible Personal Property

Answer 5

Property that cannot truly be touched such as stocks, bonds, patents, and copyrights.

Question 6

Joint Tenancy with Rights of Survivorship

Answer 6

An undivided interest in property held by two or more related or unrelated persons.

• 2 or more owners
• Right to transfer freely without consent
• Has an automatic survivorship feature
• Actual contribution rule or % owned included in gross estate (50/50 for spouses)
• None included in probate estate

– Income Tax Basis of heir: heirs original deemed contribution plus the FMV included in decedents gross estate

Question 7

Legal Ownership

Answer 7

Possession of legal title to the property.

Question 8

Life Estate

Answer 8

An interest in property that ceases upon the death of the owner of a life interest or estate and provides a right to the income or the right to use property or both.

Question 9

Quasi-Community Property

Answer 9

Property that would be community property had the married couple been living in the community property state at the time of acquisition (applies to married couples who move from a common law (separate property) state to a community property state)

Question 10

Real Property

Answer 10

Property that is land and buildings attached to the land.

Question 11

Residence Domiciliary

Answer 11

An individual’s legal state of residence.

Question 12

Tangible Personal Property

Answer 12

Property that is not realty and may be touched.

Question 13

Tenancy by the Entirety

Answer 13

A JTWROS that can only occur between husband and wife.

• 2 owners (spouses)
• Need consent of spouse to transfer
• Has automatic survivorship feature
• 50% of FMV included in gross estate
• None included in probate estate

– Income Tax Basis of heir: heirs original deemed contribution plus the FMV included in decedents gross estate

Question 14

Tenancy in Common

Answer 14

An undivided interest in property held by two or more related or unrelated persons.

• 2 or more owners
• Right to transfer freely w/out consent of other tenants
• No automatic survivorship feature
• FMV of ownership % included in gross estate
• FMV of interest included in probate estate

– Income Tax Basis of heir: probate amount

Question 15

Term Interest

Answer 15

An interest in property that ceases after a defined period of time.

Question 16

Usufruct

Answer 16

A Louisiana device similar to a life estate which provides the holder with the right it use property and/or the right to income from the particular property.