Community Property with Right of Survivorship

Married couples holding title as joint tenants is a popular device for avoiding probate, since, upon the death of one joint tenant, the decendent’s interest vests immediately in the survivor. There is no need for probate because there is nothing to pass with decedent’s estate. Recording a simple documents known as the Affidavit Death of Joint Tenant can be used to terminate the joint tenancy

Example

Existing Cost Basis Plus Improvements  $200,000

Step-up Cost 100% of home

at time of death $400,000                                     $400,000

New Stepped-Up Cost Basis                              $400,000

If the spouses hold title as Community Property with Right of  Survivorship, the entire property value on the day of  one spouses death provides a s step-up in cost  for 100% or entire value of the home. This can make a signigicant dirrerence in tax liability when the survivint spouse goes to sell the property.

In order to create this new form of ownership, the deed to the husband and wife must specifically state the vesting as “husband and wife as community property with right of survivorship. One unusual provision of the new law, however , is that the deed must also be signed or initialed by the husband  and wife. Thus, whereas a deed usually only requires the signature of the grantor in order to  be valid, any conveyance deed that transfers title as “community property with right of survivorship” should have the signatures of both grantors and the husband and wife as grantees.

Community property with right of survivorship provides  property held in this form of ownership will pass to the survivor,  without probate, subject to the “same procedures as property held in joint tendancy.