“Thought for the Day” #891 – by Stephen R. Elville, J.D., LL.M.

January 25, 2017

Community property trusts, now available under Tennessee, South Dakota, and Alaska law, can be a powerful tool of choice for married couples in separate property states (like Maryland) who wish to achieve a full 100% step-up in cost basis at the death of the first spouse to die.  These three states allow clients from across the country to opt-in to community property law through the use of trusts, thereby getting community property treatment under Internal Revenue Code Section 1014 to maximize income tax benefits at the death of the first spouse, especially where the trust holds highly appreciated assets.