COMMUNITY PROPERTY AGREEMENT IS A LOW COST
ALTERNATIVE TO PROBATE OR A REVOCABLE LIVING TRUST
A Community Property Agreement is a written; notarized agreement between
spouses that the deceased spouse’s interest in assets owned by the marital community pass to the surviving spouse when one of the spouses dies. If you want your interest in your community property to go to your spouse on your death, a Community Property Agreement is a low cost way to avoid probate and is an inexpensive alternative to a Revocable Living Trust. Thus a Community Property Agreement acts as a “Will substitute” in much the same manner as a joint tenancy with right of survivorship account.
A Community Property Agreement provides a step-up in the tax basis of all
community property on the death of the first spouse to die, and is often recommended for estates which are not subject to federal estate taxes.
Both halves of community owned property, the deceased spouse’s half and the
surviving spouse’s half, receive a step up in the tax basis at the death of the first spouse with a Community Property Agreement. The new basis is equal to the fair market value of the property at the death of the deceased spouse.
Community Property Agreements between spouses cannot distribute property to their children or third parties, and Community Property Agreements do not provide federal estate tax savings when the deceased spouse’s estate is larger than the amount the unified credit will offset from estate taxes.
Not every Community Property Agreement is worded exactly the same. You should be sure you understand the wording and effect of a Community Property Agreement and you should have legal advise before signing it. A Community Property Agreement is a contract and is subject to the rules of contract interpretation.
For preparation of a Community Property Agreement, and for estate planning advice, call Cindy Hutchinson at (360) 695-7909 to schedule an appointment
with attorney Dan Marsh.
MARSH, HIGGINS, BEATY & HATCH, P.C.
1112 DANIELS STREET, SUITE 200
PO BOX 54
VANCOUVER, WA 98666
(360) 695-7909 / (360) 694-1758 (FAX)
www.marsh-higgins.com
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