Non-trust and Non-probate Transfers (part II)

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP

Like joint tenancy, upon the death of one spouse, the property will immediately pass to the surviving spouse by operation of law.  The benefit community property with right of survivorship has over joint tenancy is that both halves of the property will receive a step-up in basis.

However, community property with right of survivorship has many of the same pitfalls as joint tenancy: lack of control over the ultimate disposition and management of the assets; lack of creditor protection for the beneficiaries; and possible unintended and unwanted outcomes if the surviving spouse decides to change their estate plan after the death of the first.

Community property with right of survivorship also does not address estate taxes, or asset preservation for the remainder beneficiaries.  It also does not provide the decedent with the ability to designate the assets from which outstanding debts should be paid.  This is particularly helpful if the decedent plans on leaving anything to charity.


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