The title that was held by the deceased person passes automatically to the surviving joint owners, not to the heirs of the deceased person or their relatives or persons named in his or her Will or Trust. The right of survivorship continues until the sole survivor owns all of the property.
- when the first parent dies, the title passes directly to the second spouse, which means children are NOT inheriting anything at that point. The solo and only beneficiary is the surviving spouse. Children becomes beneficiaries of the property after the second spouse death, NOT before.
Upon the death of one of the joint tenants the property automatically becomes the property of the surviving joint owner.
- once again, the entire property is transferred to the surviving spouse, not the the children.
When one passes away their heirs received a "step-up" in their basis. The tax basis for the heirs is the value of the property on the date of death -- not on the date the property was acquired.
- since children are not inheriting any property before the second survivor dies (no title is transferred to children before after mother death), the children receive step up basis of FMV of mother's death. That's when they become legal owners of the property.
A joint tenancy interest cannot be willed to anyone, because your interest ceases at your death and passes automatically to the surviving joint tenant(s).
Note that when the last surviving person who was a joint tenant dies, there is no automatic survivorship right because there are no other joint tenants. The property passes to that person's heirs.
- when the last survivor dies, only than the property passes to heir.
It all comes down to this. With JTWROS children have no rights to the property before the last survivor dies. The children are not inheriting anything from their father, since the title of the father’s half is passed to the mother, not to the children. The property is automatically transferred to the next survivor, the mother, regardless what’s in the will or trust.
Now back to the basis in the property. When you inherit a property, your basis will be fair market value of the property on the day you legally inherit the property. Since the children are not inheriting anything until mother’s death, their basis will be the fair market value of the property on day of their mother’s death.
Does it helps?