Taking title as community property with right of survivorship offers two advantages:
- avoiding formal probate when a spouse or partner dies, and
- easy qualification for a federal income tax break (for married couples only, not RDPs).
the tax consequence I mentioned above is what's known as a "step up in basis".
If yo want to put your co-owned property in joint tenancy and qualify for a stepped-up cost basis, too, you simply need to be able to convincingly document to the IRS that the property is community property. Some experts recommend that you place the words "community property held in joint tenancy" on the deed.
There is very little reason for a married couple to choose a joint tenancy. community property with right of survivorship offers the same advantages and more.
What is the big deal then? TERMINATION OF CO-OWNERSHIP. for community property with right of survivorship, BOTH spouses must agree while joint tenant may transfer interest to him- or herself or another as tenants in common (TIC), or may get partition order from court.
unless you don't want to leave the property to your spouse, hold title in a different way.
What is the difference btw Joint tenancy and community property?
no probate necessary for both.
death--
1. Joint tenancy has survivorship.
2. community property has no survivorship.
interest---
1. Joint tenancy must have equal interest for all of parties.
2. community property don't require the equal interest for all of parties.
Tax—
- community property only limits to married couple;- only community property can qualify for a 100% stepped-up federal cost basis. for more info, see IRS Pub 555, community Property, available at www.irs.gov.
- community property states
the states that currently have community property laws include Alaska （ a somewhat unusual law, in which community property is never automatic but can be chosen ） , Arizona, CA, idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
for details, please refer to
http://blog.wenxuecity.com/blogview.php?date=201008&postID=21170
