Nevada couples may enjoy some benefits for their estates because they live in a community property state. One of these benefits is that all of the property that is acquired during the marriage jointly is considered to be the community property and thus owned by each spouse.
When spouses acquire assets that have a low basis and those assets increase in value over time, the values of those assets are stepped up to the value they have at the time one spouse dies. In community property states like Nevada, the entire basis of the property held jointly steps up in basis when one spouse dies. However, in the 41 states that are not community property states, only half of the value of the jointly held property steps up in basis upon the death of one spouse. This means that if the other spouse sells it, he or she may face substantial capital gains taxes.
One option for married couples is to create community property trusts. These trusts may be established in Alaska or Tennessee, but they can be formed by people who live elsewhere. Assets that are placed in these trusts when they have a low basis get the same double step-up in basis upon the death of one of the spouses that people in community property states get. This may help to save money that would otherwise be spent on capital gains taxes.
Trust planning may be used to accomplish many different goals according to the needs of an individual’s family. People who are interested in preserving their wealth may want to consult with estate planning attorneys about what types of trusts and other estate planning tools may best help them to meet their goals. Attorneys may recommend different types of trusts depending on their clients’ individual needs and goals.