Your choice of state residence can be quite important as Barron's Penta Daily discussed recently in "How Community Property States Are Different," because it has implications for your estate plan.
The main difference between community property states and other states is in how marital assets are considered to be legally owned. In a community property state everything acquired during a marriage is considered to be equally owned by the husband and wife except for any inheritances solely made to one of them. Property acquired before the marriage is not community property.
This is different from other states where spouses can continue to acquire separate property after marriage.
Among the points to be considered are:
- Capital Gains – Community property states have a benefit for surviving spouses because the spouse receives a step-up basis on an entire home, for example, instead of only half the value of the home in other states.
- Gifts – If one spouse gives a gift of community property without the permission of the other, the spouse who did not make the gift can revoke it later.
- Life Insurance Trusts – Funding a life insurance trust for the benefit of a spouse needs to be done from non-community property or the entire purpose of the trust will be defeated.
An estate planning attorney can guide you on the legal implications of your state of residence or a state you are considering for a home.
For more information visit my Wichita KS Estate Planning Attorney website
Reference: Barron's Penta Daily (June 28, 2016) "How Community Property States Are Different"