A great big thank you for this revelation. You potentially saved me a ton of money.

Well, maybe your heirs rather than you...
: )

A few years ago I looked up the figure for how much tax the US was actually collecting under this rule. I don't remember the exact number, but it seemed to be about the size of one big (but not enormous) estate. 8 digits. It's best to colour within the lines, but it's also interesting to note that in this case it seems that nobody is checking at all. Maybe that has changed or will change.

I suspect a common situation is that one spouse dies with a joint account, the surviving spouse simply moves assets from that joint account to a new account elsewhere in their individual name without remembering to tell the first institution about the death. This sounds dodgy, and is, but in some places it's almost mandatory: many wealth management banks will force the prompt closure of any joint account when one party dies...so if they find out, then while dealing with funeral arrangements you can be unable to pay your water bill. Not just a policy, the mandatory automatic closure is right there in the account agreement.

All of this more obviously applies to US real estate. It's the one asset class for which tax collection really works, whether for rent or capital gains or estate taxes: the government knows where it is, and it isn't moving.

Jim