When purchasing a home, married couples and domestic partners need to decide how they wish to hold title on their deeds. In 2001, the California legislature created a new form of title referred to as Community Property with Right of Survivorship. This form of ownership has characteristics of both a joint tenancy deed and a community property deed. Like a joint tenancy deed, the Community Property with Right of Survivorship Deed has a “right of survivorship” component. This means that when a co-owner dies, the surviving co-owner automatically becomes the sole owner without a need for probate.
Before 2001 in California, if a married couple co-owned real property in community property and not as joint tenants, the surviving spouse might have to probate the estate of the deceased spouse, or file a spousal property petition to obtain title to the property. Thus, title held in Community Property with Right of Survivorship avoids the specter of probate of the estate of the deceased spouse. For questions on estate planning legal matters, contact a Roseville estate planning attorney of NewPoint Law Group, LLP.
Why Hold Title in Community Property at all?
One reason why married couples choose to hold real property in community property is to obtain a step-up in basis on the share of the “first to die spouse.” When the surviving spouse dies and still holds the asset, the basis will receive another adjustment to the fair market value as of the death of the surviving spouse. This means that there will be no gift tax associated with the transfer. In addition, if the property is eventually transferred to an heir through a will or a trust, the step-up in basis will result in no capital gains to be paid on the appreciation of the real property.
Real estate professionals, including realtors and title companies, can provide a real value added service to buyers in real property sales; they demonstrate how title should be held, and present the advantages and disadvantages of various forms of deeded title.
While holding title in a revocable living trust is a common method to avoid probate, use of deeds held in Community Property with Right of Survivorship is another method that can avoid probate for the “first to die spouse” without the costs associated with a revocable living trust.
Except for the risk of simultaneous death, use of a deed where the property is held in Community Property with Right of Survivorship is a viable alternative for married couples and domestic partners who own real property, and who may not be ready to commit to a revocable living trust. However, it is recommended that after the death of the “first to die spouse,” the surviving co-owner consult with an experienced estate planning attorney to ensure that probate is avoided for the next generation.
How Can the Roseville Estate Planning Attorneys of NewPoint Law Group, LLP Help?
A Roseville estate planning lawyer at NewPoint Law Group, LLP has the knowledge and experience to guide you through this process. Please contact us to schedule an appointment by calling 800-358-0305 today.