If you and your spouse or partner live in one of the 9 community property states in the U.S., you may have a tax advantage after after one of you passes away.
Specifically, 100% of any property that is community property will generally receive a new “basis” - or tax cost - for income tax purposes.
In non community property states, only the property owned in the name of the deceased spouse or 50% of jointly owned property will get this “step up” in basis.
For couples living in a community property state, creating individual Trusts could result in losing this tax advantage, whereas a Joint Trust should preserve it.
In addition, a Joint Trust reflects the joint ownership and management of community assets that applies to most couples living in community property states.
The 9 community property states are:
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Alaska is an opt-in community property state that gives both parties the option to make their property community property.
Feel free to reach out with questions or feedback: email@example.com