New Options of Holding Property Title
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New Form of Holding Property Title

Which is most advantageous to you?

 

July 2001, California Civil Code 682.1 went into effect, which established a new form of holding title known as community property with right of survivorship. The new form of ownership combines the survivorsip rights of  joint tenancy with the tax advantages of community property and can be used in connection with conveyance instruments created after this date.

 

Joint Tenancy 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

½ Existing Cost Basis Plus Improvements ($200,000)$100,000

Step-up Cost ½ of existing plus ½ of value                 

at time of  death $400,000                                                  $200,000

New Stepped-Up Cost Basis                                               $300,000

If the  spouses hold title in joint tenancy,  only the decedent’s one-half of the property will receive the step-up cost basis.

 

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.

 

Consider which is best for you!

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.

 

                   **Please consult your tax consultant for a tax opinion or attorney for any legal opinion.


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Bennion Deville Homes
27941 La Paz Road Suite A • Laguna Niguel, CA 92677
Phone: (949)463-1394 • CA BRE# 01312208
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