Anna and Ben are married and plan to purchase a home in Tacoma, Washington. They want to ensure that if one of them dies, the other will automatically become the sole owner without going through probate, AND that both halves of the property receive a stepped-up tax basis at the first death. Which form of title should their broker recommend they discuss with their attorney?
Correct Answer
C) Community property with right of survivorship
Community property with right of survivorship (CPWROS) is the form of title that best meets both of Anna and Ben's goals. First, the survivorship feature ensures that the deceased spouse's interest passes automatically to the surviving spouse without probate. Second, because CPWROS is a form of community property, both halves of the property receive a full step-up in tax basis at the first death under federal tax law — an advantage that joint tenancy does not provide (joint tenancy only steps up the deceased's half). Their broker should recommend they consult an attorney to create CPWROS.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
Fee simple absolute is the highest and most complete form of property ownership, giving the owner unrestricted rights to use, possess, enjoy, and dispose of the property. It is of unlimited duration and fully inheritable.
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