Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

April 26, 2013
What are the advantages of holding title to real property as community property with right of survivorship?

Regarding the recent question in the Bee on changing title of your home to community property with right of survivorship, what is the overall benefit of making the change? We paid off our house about a year ago and wonder if changing the title is something recommended.

Barbara, Sacramento

Prior to 2001, married couples without a trust most commonly held title to their real property as "John Smith and Mary Smith, husband and wife, as joint tenants" or "John Smith and Mary Smith, husband and wife, as community property." If the Smiths held title as joint tenants, on the death of the first spouse, the joint tenancy form of title made transfer of the property to the surviving spouse very simple. The surviving spouse simply had to record an affidavit and the death certificate with the Office of the County Recorder for the county in which the property was located and title then would be held solely by the surviving spouse.

If title was held as community property, the surviving spouse had to file a petition with the probate court asking the court to confirm that the property was community property and that the interest of the deceased spouse passed to the surviving spouse. For capital gains tax purposes, even though only a one-half interest in the property was included in the deceased spouse's estate, holding title as community property allowed the surviving spouse to claim a step-up in basis as of the date of death of the deceased spouse on both halves of the property, which was not the case for property held in joint tenancy.

In 2001, California enacted another form of title holding, which combined the advantages of joint tenancy and community property title holding. Married couples could hold title to their real property as "John Smith and Mary Smith, husband and wife, as community property, with right of survivorship." This allowed married couples the benefit of joint tenancy title holding - transfer by recording of an affidavit on the death of the first spouse and avoiding a court proceeding - while also deriving the tax benefit of receiving a step-up in basis for the entire property.

The information provided is very general and assumes that the character of the property owned by you and your husband already is community property. There may be other factors to consider before changing the form of title to property which could be unique to a specific circumstance and which are beyond the scope of this article. It is therefore recommended that you consult with your estate planning attorney or accountant to find out how such a change might affect your particular situation.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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