Many married couples own most of their assets as joint tenants with rights of survivorship (JTWROS) or by Tenants by the Entireties (a specific joint ownership between husband and wife). On the death of the first spouse, the surviving spouse often assumes that the property, whether real or personal, simply transfers to the surviving spouse. This is certainly true of tangible personal property (such as household furnishings, jewelry, clothing and personal effects). Intangible property, such as bank accounts, stocks, bonds, mutual funds and investment accounts may require the production of a certified copy of the death certificate in order to transfer the title into the surviving spouse’s sole name.
Florida law, however, requires three steps in order to clear the title of the real estate from joint tenancy or tenants by the entireties into the surviving spouse’s name:
- The first requirement is that a certified copy of the death certificate be recorded with the Clerk of Court in the county where the real property is located. If the couple owns real property in more than one county, a recording is required in each county. Preferably, the death certificate should not recite a cause of death. (In Florida, you can obtain a death certificate with or without a cause of death recited on the certificate. Other states do not offer this option.) If the death certificate recites a cause of death, the Clerk’s office will remove the information before the certificate is recorded. The recording of the death certificate proves the death of the joint tenant. This is often sufficient to transfer title to real property in many states. Florida procedures, however, require two more steps.
- The second step is that the surviving joint tenant should execute an “Affidavit of Continuous Marriage.” The affidavit is not required by statute to transfer the property, but most title insurance companies will require that the affidavit be filed with the County Clerk in order to transfer the property in the future. The Affidavit will typically state that the couple was married on a specific date, and remained married to each other without an intervening divorce until the date of death of the deceased spouse. The “Affidavit of Continuous Marriage” provides proof that the Tenancy by the Entireties of the couple was valid through the time of death of the deceased spouse, and may defeat any liens that may attach if filed against only one spouse. Such liens may include judgments, child support liens or tax liens and warrants. An intervening divorce would sever the entireties tenancy into a tenancy in common, potentially allowing certain liens or judgments against one spouse to attach to property previously held as marital property.
- The third step to clearing title to jointly held real estate is the filing of an Affidavit of No Florida Estate Tax. These are forms generated by the Florida Department of Revenue and is commonly referred to as a DR-312 or DR-313. Florida has not had an Estate Tax since 2004, when only estates that were required to file a Federal Estate Tax were required to pay a Florida Estate Tax. The requirement to file a DR-312 or DR-313 remains, however. If the Estate of the decedent is not required to file a Federal Estate Tax Return (required for Estates over $5.43 million in 2015), then the personal representative executes and records a DR-312, indicating that no Florida Estate Tax is due, and that the Estate is not filing a Federal Estate Tax Return. If the Estate of the decedent is required to file a Federal Estate Tax Return, the personal representative executes and records a DR-313, indicating that a Federal Estate Tax Return (Form 706) will be filed.
The real purpose behind filing the DR-312 or DR-313 is to create a public record of whether the Decedent’s Estate will be filing a Federal Estate Tax Return. If the Estate is required to file a 706 return, the filing of the DR-313 creates a putative tax lien in favor of the United States Government. Real property cannot be sold until the IRS releases its unrecorded putative lien, typically through the recording of the IRS’ Closing Letter in the public record. If the Estate wishes to sell the real property during the 706 audit period, the Estate must receive and record a Release of Lien by the IRS before the proceeds of the sale can be released to the Estate. For Estates that file a DR-312 indicating that the Estate will not be filing a 706, the DR-312 acts as a public record to indicate that there is no putative tax lien against the property.
Bottom line. Clearing title to real estate upon the death of the first spouse is often overlooked until the surviving spouse wants to sell the property, or by the surviving beneficiaries when the second spouse dies. Closings can be delayed while title is cleared. Sometimes, beneficiaries do not have sufficient knowledge to provide affidavits without further research. For these reasons, the surviving spouse should seek counsel and assistance shortly after the death of the first spouse to make sure that title to real estate is properly cleared, and title is vested in the sole name of the surviving spouse.