Friday, April 21, 2017
One technique for keeping the value of your estate in the family is a community property trust, which can save clients substantial amounts of money in capital gains taxes. Upon creating a community property trust, the entire value of the property receives a basis step-up when a spouse dies, allowing the surviving spouse to sell the property with reduced or eliminated capital gains taxes. In other words, the capital gains taxes on the property will only be calculated from the appreciated value since the deceased spouse’s death, which will be minimal to zero. This tax-saving strategy is a valuable tool for certain couples, particularly those with low basis assets that wish to hold on to the assets until one spouse dies, but this type of trust should not be used for all client situations.
See What Is Community Property and What Are Community Property Trusts?, Wealth Management, April 18, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.