Joint ownership of property. Property held in the United States may have been acquired with the proceeds of joint funds, but the technical property ownership may only be reflected in the name of an individual foreign client. For example, property held in the United States may have been acquired with foreign-source funds that really constitute the community property resources of two spouses. That ownership of community property funds may be determinable under the laws of a foreign jurisdiction. (In Revenue Ruling 72-443, 1972-2 CB 531, the Service ruled that one half of the value of real property situated in the United States that was acquired in the name of the decedent, who was a citizen and a resident of Norway, was included in his gross estate for the purpose of U.S. estate taxes. The state in which the property was located recognized the vested rights of the spouse in the funds used to purchase the property. Therefore, under Norwegian community property law, the decedent was treated as owning at the time of his death only a one-half interest in the property.) In this type of situation, each spouse may own, therefore, only a one-half interest in the property even though it is nominally held entirely in the name of one of the spouses.
Similarly, the property may be held in a tenancy in common or in a joint tenancy with the right of survivorship. In each instance, ascertain the precise source of the funds for the investment in and ownership of these properties.
Property rights of a decedent may cease to exist at the time of death. For example, as determined by reference to foreign law concepts (as mandated under applicable conflict-of-laws principles) the decedent may really own a life estate in certain property, with successors holding the remainder interest. These rules might apply even though the property has a U.S. situs because, under applicable conflict-of-laws principles, the property rights are to be determined under the laws of the domicile.