A married taxpayer holds virtually all his assets as community property in a living trust established in a community property state. How are these assets treated after he and his wife move to a separate property state? In particular, if one of them subsequently dies, what basis step-up rules will apply?
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Evan Appelman, EA -
You mean, all THEIR assets, not just his assets, right? The day before they move, each spouse owns half. The day after they establish their new domicile, they still each own half, but going forward it's separate property. The basis step-up rules for separate property would apply if domiciled in a separate property state at time of death.Originally posted by appelman View Post"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard -
Although I'm not absolutely sure, I would speculate that real property located in a community property state would retain the "double step-up" possibility even if the H&W owners moved to another (separate property) state, and then one of them died. If you have clients that fit this fact pattern, they should probably consult with a good tax attorney.Originally posted by Rapid RobertRoland Slugg
"I do what I can."Comment
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I have been told that if someone moves to a different state after establishing a trust, they need to get the trust established in the new state. The laws might be different in each state and the trust may not be enforceable in the new state. Same thing for wills.You have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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I'm still skeptical, but here is an article that supports your speculation. A lawyer should definitely be consulted.Originally posted by Roland Slugg View Post
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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