The 50-50 Rule
The 50-50 Rule provides that only 50 percent of certain property titled, and held jointly by the decedent and spouse with rights of survivorship, or as tenants by the entirety, will be included in the decedent's estate — regardless of the size of his or her contributions. This rule applies to both real and personal property, regardless of how it was acquired or when it was purchased.
The Percentage-of-Contribution Rule
The Percentage-of-Contribution Rule (also known as the Consideration-Furnished Rule) is used where the 50-50 Rule does not apply. Essentially, this provision values jointly held property with survivorship rights by the percentage of the purchase price attributable to the decedent's contribution. So, if the survivor can prove contribution of one-third of the original purchase price, two-thirds of the value of the jointly held property will be included in the decedent's estate. I.R.C. Section 2040.
There are two rules that affect the estate taxation of property held jointly with the right of survivorship — the 50-50 Rule, and the Percentage-of-Contribution Rule.
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