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REBA Modifies Title Standard No. 3 Addressing Federal Estate Taxes

11/10/2018

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On November 5, 2018 the Real Estate Bar Association for Massachusetts (REBA) adopted Attorney Herbst's proposal to modify Title Standard No. 3 which addresses federal estate tax liens on real estate after someone passes away.  On small estates the Personal Representative can simply sign an affidavit indicating that the gross estate is less than the federal exemption and the recorded affidavit clears the title for this issue.

However, if the size of the estate exceeds the federal exemption you previously would either need a closing letter or lien release from the IRS which frequently can take 18 to 24 months to process (after the filing of a return).  Recognizing that this was an unacceptably long time to wait before one could sell real estate, the IRS issued Notice 2017-12 telling everyone that they should rely on a transcript when such transcript reports that the examination of the return is closed.  In a recent filing for an estate our office was able to obtain such a transcript from the IRS just 32 days after filing the return, a much shorter time period than 18 to 24 months.

Therefore last year Attorney Herbst submitted a request to the REBA Standards Committee requesting that Title Standard No. 3 be amended to recognize the new option available in IRS Notice 2017-12.  Just this week the committee approved the modification and we now have one more option – a hopefully much quicker option – to clear real estate titles from the impact of the federal estate tax lien.

Two big thank you’s are owed to Attorney Lisa Delaney and Plymouth County Register of Probate Matt McDonough.  Attorney Delaney sits on the standards committee and guided the amendment process taking it from initial thoughts, making sure the supporting documents the committee needed were there, and seeing it through to final vote.  Register McDonough assisted in figuring out what could and could not be filed in the probate court’s file to create the record that the committee wanted to rely on.

Whenever you have real estate in a probate estate it is important to identify the title clearing steps necessary as early on as possible as many steps can take a long time to complete.  By starting the process earlier you’ll have a less difficult time later when you go to sell the property.  

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    meet the attorneys

    Peter C. Herbst Jr
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    Areas of focus: estate planning, estate & trust administration and elder law. 
    Briana N. Capshaw
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    Areas of focus: estate planning, estate & trust administration, and 
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