Step up for real estate owned before marriage

[dregfr]

What is the name of your state? California


Hi,

I owned a house before I got married. I am thinking about adding my wife to the title as community property.

If I do this, and she dies, will I get a 100% step up in basis?

If I die, and she survives, and the title is under a living trust with both myself and my wife, will my wife be able to sell the house with a 100% step up in basis?

Thank you in advance.

 

[Taxing Matters]

If I do this, and she dies, will I get a 100% step up in basis?

If I die, and she survives, and the title is under a living trust with both myself and my wife, will my wife be able to sell the house with a 100% step up in basis?

If the home is owned by the two of you as community property at the time the first of you dies the home will get a step up in basis to fair market value (FMV) on the date of death. It does not matter which of the two of you dies first.

As for the living trust, it matters what kind of trust it is. The term "living trust" simply refers to any trust set up during the lifetime of the trust creator. That is distinguished from a testamentary trust, which is one that is created from the will of the trust creator. But there are all kinds of trusts with different terms and as a result have differing effects. The most common living trust for estate planning purposes is the revocable living trust, which is a trust that allows the creator to revoke the trust at any time before he or she dies. A trust with that feature qualifies as a grantor trust under the Internal Revenue Code (IRC) and under the grantor trust rules the assets of the trust are treated as though they are still owned by grantors themselves; in effect the trust is ignored. If under the applicable state law the property would still be community property if the trust was revoked then when the first spouse dies the property should still get a full step up in basis to FMV at the time of that spouse's death.

 

[dregfr]

If the home is owned by the two of you as community property at the time the first of you dies the home will get a step up in basis to fair market value (FMV) on the date of death. It does not matter which of the two of you dies first.

If the property was owned by myself only (and not with my wife) before marriage, and I add my wife as a co-owner as community property when we are married, will the same 100% step up in basis occur if either one of us dies?

 

[LdiJ]

If the property was owned by myself only (and not with my wife) before marriage, and I add my wife as a co-owner as community property when we are married, will the same 100% step up in basis occur if either one of us dies?

That is the same question you asked previously, and the same question that Taxing Matters answered.

If the home is owned by the two of you as community property at the time the first of you dies the home will get a step up in basis to fair market value (FMV) on the date of death. It does not matter which of the two of you dies first.

 

[HRZ]

THe odds of divorce are higher than the odds of death ...and to convert separate property to community property is pretty close to irreversible .

If its separate property and you die first and she is willed the property, she gets a full step up in basis anyway . Only in the situation of were spouse to die first do you lose out on the step up issue ....and as far as I know if your spouse were in final stages of a long battle with a likely fatal outcome , one could add her to deed up to the final moments ( subject to whatever requirements in CA may be as to when a deed is effective ..e.g. When delivered or when recorded ..ask counsel)