17 Dec Does a deed have to be changed to get property tax benefits?

Q. When my father-in-law and my mother-in-law moved from their principal residence in 2001, the lawyer had recommended they put their new place only in my mothers-in-law’s name. My mother-in-law passed away in 2019 and the question then became what to do with the deed. My wife and her siblings were advised there would be no need to change it since the assets would all move over to my father-in-law as being the surviving spouse. The deed was left unchanged. My father-in-law has been receiving ANCHOR benefits and has received benefits from the Senior Freeze. We just learned of a property relief from the town he lives in but was denied as the deed is not in his name. We are appealing this based on him being the widower of the “owner” of the property. Do we need to have the deed changed? I’m also concerned about the step-up value of the home for inheritance reasons. When my wife and her siblings go to sell the home, would the market price be reflective of the price five years ago when my mother-in-law passed, or would it be when my father-in-law passes away?
— Still working

A. People often wonder what they need to do about a deed when someone dies.

When spouses own real property in New Jersey, as tenants in the entirety as husband and wife, and one spouse dies, the surviving spouse automatically owns an interest in the entire property and there is no need to change the deed, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

“However, if a spouse conveyed his interest in the property to the other spouse, and the spouse owning a 100% interest in the property dies, then the surviving spouse will inherit the property only if there is a will bequeathing the property to the surviving spouse or the surviving spouse inherits the property pursuant to the laws of intestacy if the deceased spouse did not leave a will,” Whitenack said.

The interest in the house owned by the deceased spouse received a step-up in basis when the deceased spouse died, she said.

For purposes of the property relief programs, it probably makes sense for the deed to be changed to reflect the ownership in the surviving spouse assuming he did in fact inherit the property.

“Assuming that the reader’s siblings inherit the property upon the death of the reader’s father-in-law, through his will or the laws of intestacy, his estate will receive a step up in basis,” Whitenack said.

Email your questions to .

This story was originally published in December 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.