Community property with right of survivorship is a way of couples to hold title to property they own. It is available to married people living in Alaska, Arizona, Nevada, Texas, and Wisconsin. The method of dealing with property ownership applies when one person passes away and can be a way of saving money on probate fees and taxes, too.
Under community property laws, property acquired by a couple during their marriage may be deemed marital property or separate property. Community property with right of survivorship applies to marital property only.
Death of Spouse
In community property states, each person automatically has a one-half interest in the couple's marital property. The right of survivorship is concerned with what happens to that person's share when they die.
Lower Capital Gains Taxes
Another advantage to choosing community property with right of survivorship is that under Federal law, the surviving spouse is stepped up for capital gains purposes to the value as of the date of death. If the surviving spouse sells the property for the same amount, they don't have to pay any capital gains taxes at all.
See a lawyer
If you are thinking about designating some of your property as community property with right of survivorship, please consult a licensed attorney so that you understand the implications first. He or she can help you file the paperwork necessary to change the way you hold title to the property. For more information about property laws and divorce check out these LTK slideshows: