Harold and Mary are married and live in a community-property state. During the marriage Harold bought a parcel of real estate for $200,000 in community funds and titled the property in his name alone. Mary died on January 30^th of this year and was survived by Harold, who did not remarry. The parcel of real property was worth $390,000 on January 30^th of this year but was only worth $330,000 at year-end. What amount, if any, is included in Mary's gross estate?

Question

Quizplus · Accepted Answer

In a community-property state, each spouse has an equal ownership interest in all community property acquired during the marriage, regardless of whose name is on the title. Therefore, Mary had a 50% ownership interest in the real estate. Her share of the property at her death was worth $195,000 ($390,000 x 50%). This amount would be included in her gross estate. The fact that the property declined in value to $330,000 at year-end is irrelevant for estate tax purposes.

Harold and Mary Are Married and Live in a Community-Property