It appears that Heasty v. United States has eliminated the previous uncertain estate tax consequences of severing jointly owned property. In Heasty the Tenth Circuit has aligned itself with the Seventh and Ninth Circuits and firmly reinforced the refusal of the courts to adopt an estate tax construction of "interest" as taxed by either section 2035 or section 2036 in severed joint ownership situations. Thus, in the absence of an amendment to the federal estate tax statutes, it appears that estate planners may continue with confidence to advise severance of jointly held property.
L. Bruce Wright,
Federal Estate Tax—Transfer of Jointly Held Property Made in Contemplation of Death or Accompanied by Retention of Life Interests: Heasty v. United States, 370 F.2d 525 (10th Cir. 1966),
48 Neb. L. Rev. 527
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