Community Property and Estate Planning

Let’s get right to the point…there are some really great benefits to living in a community property state such as California, Arizona, Texas, Washington, etc. For estate planning purposes, holding title as community property in these states offers a full step-up in basis upon the death of the first spouse. Additionally, if the decedent leaves his/her portion of the community property interest to the surviving spouse, there would be no increase in the taxable estate. Where property has appreciated significantly at the time of the first spouse’s death, this step-up of both halves of community property provides significant advantages to the surviving spouse over jointly held property. Ultimately what this all boils down to is that you hold title in a way that will maximize your estate planning in a community property state. To make sure you you have everything in the right place, we advise you to meet annually with your CPA, estate planning attorney or financial adviser to preserve your assets for future generations by taking advantage of estate and gift tax exemptions.