Double step up cost basis death of spouse

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Topic Author
BuzzyQ
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Joined: Wed Jan 19, 2022 11:12 am

Double step up cost basis death of spouse

Post by BuzzyQ »

Retired military: spouse and me resident of Texas (community property state) from birth to retirement. Claimed Texas as residence until retirement in Alabama (common law state) in 2004. Are all my assets considered community property and eligible for double cost basis step-up upon death of spouse?
Topic Author
BuzzyQ
Posts: 6
Joined: Wed Jan 19, 2022 11:12 am

Re: Double step up cost basis death of spouse

Post by BuzzyQ »

bsteiner
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Location: NYC/NJ/FL

Re: Double step up cost basis death of spouse

Post by bsteiner »

About 2/5 of the common law (non-community property) states, but not Alabama, have enacted the Uniform Disposition of Community Property Rights at Death Act: https://www.uniformlaws.org/committees/ ... b12cba4fb8.

For example, here's New York's: https://law.justia.com/codes/new-york/2 ... -6/part-6/.

You would have to check whether Alabama has similar provisions under case law. There's also an argument that it would have to so provide as a constitutional matter.

Another possibility, to strengthen the argument, is to put assets into a community property trust in one of the states that has a provision for that.
Alan S.
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Location: Prescott, AZ

Re: Double step up cost basis death of spouse

Post by Alan S. »

OP retired around 18 years ago. This is from the posted link:
couples who relocate from community-property states to common-law states can maintain the community-property standing of the property they bring with them.
Let's assume the value of CP assets was 1m at the time of the move. 200k of those assets were used to purchase a home in AL. The remaining 800k generated gains of 400k in the last 18 years but the actual investments were sold and repurchased as normal, and an equal amount was used for spending, leaving the current value of non housing assets at 800k.

If AL had adopted the Uniform Disposition.. Act, how much of the 800 k could be treated as CP?
Stoic9
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Joined: Mon Dec 10, 2018 6:14 am

Re: Double step up cost basis death of spouse

Post by Stoic9 »

Interesting, following
Topic Author
BuzzyQ
Posts: 6
Joined: Wed Jan 19, 2022 11:12 am

Re: Double step up cost basis death of spouse

Post by BuzzyQ »

https://www.hg.org/legal-articles/funct ... usts-46007
Here is an article that discuses setting up a community property trust for those living in a common law state. It states TN and Al will allow you to setup the CP trust while living in another state.
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