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Married couples have a new choice for holding
property based upon California Civil Code Section 682.1. As of
July 1, 2001 there is “community property with right of
survivorship” added to the other ways of holding title,
i.e., joint tenancy, tenants in common and community property.
Previously, property was held as “community property” to
ensure the property passing to the surviving spouse obtained the
full “step up” basis (value at date of death) for the
survivor. This required the filing of a spousal property petition
with the superior court, and a hearing to confirm the property
would receive the “step up” basis in value.
The goal of Section 682.1 is to establish the right of
survivorship benefit while also ensuring the surviving spouse
receives the favorable tax status of community property under
federal law without having to obtain a probate decree. The
benefits of taking title under community property with right of
survivorship is:
- to avoid probate of the deceased spouse’s
interest in the property
- to obtain a step-up basis of the surviving
spouse’s interest in the property
- to avoid any possible later disputes with the
IRS as to the characterization of the property
According to this code section, not only must
the grantor(s) sign the title document that transfers title (as is
normally required), but the husband and wife who are the “grantees”
must also sign the document that transfers title. If a party later
wishes to “sever” the right of survivorship, it can be
terminated in the same way a joint tenancy may be severed. Legal
assistance before executing such a document is strongly advised.
(More info is available online
at: http://www.bnfc.com/Attorney/ps/articles/cpwros.asp.)
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