By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Administration and Probate Law Attorney
One of our clients has been left with her father’s house in an estate litigation case we recently assumed. She and her brother, the executor of the estate, are quarreling over the terms of the will and its validity. As a result, she has not received the deed to the house that she was promised in the will. The property taxes for the house remain unpaid, and are gaining interest, with a sale of the home from unpaid taxes looming. So now the question becomes who pays for the taxes on the house.
The law says that if the property is intended to go to a named beneficiary, that beneficiary receives legal title of the property upon the death of the legal owner of the property. But it is not conclusive that the tax liability goes to the beneficiary immediately upon death of the owner. Our Supreme Court, for instance, concluded that legal title goes to the beneficiary subject to the authority of the executor to sell the property to administer the estate, such as to pay off debts. The federal tax courts, interpreting our New Jersey Property law, ruled that there is a “vested interest” in the home upon the death of the owner, but not actual ownership of the home until it is transferred to the beneficiary of the estate.
Another New Jersey case, I.E.’s, L.L.C. v. Simmons, dealt with stopping a tax sale of a home for failure to pay its taxes, and concluded no liability was incurred by the beneficiaries automatically for the lack of payment of taxes. The will provided that the house would go to four beneficiaries in different shares. The tax certificate remained in the name of the deceased owner (called the testator), and the executor of the estate (one of the four beneficiaries) did not pay the taxes. The court never took on the issue of whose responsibility it was to pay the taxes, but chastised the failure of the executor/beneficiary to have a new deed executed, pay the taxes on the property, and prevent the foreclosure of the property.
While it isn’t clear who owns the tax liabilities upon the death of the property owner, it is clear that this is a frequent issue and causes some confusion. Making it clear in a will who should pay the property taxes prior to transferring the property via deed is helpful, as there will be something to point to when either the estate or the beneficiary does not pay the property taxes and blames the other for not doing so.
To discuss your NJ Estate and Probate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.