Are there advantages to creating a joint trust instead of an individual trust?

If you and your spouse or partner live in one of the 9 community property states in the U.S., you may have a tax advantage after after one of you passes away.

Specifically, 100% of any property that is community property will generally receive a new “basis” - or tax cost - for income tax purposes.

In non-community property states, only the property owned in the name of the deceased spouse or 50% of jointly owned property will get this “step up” in basis.

For couples living in a community property state, creating individual trusts could result in losing this tax advantage, whereas a joint trust should preserve it.

In addition, a joint trust reflects the joint ownership and management of community assets that applies to most couples living in community property states.

The 9 community property states are:

Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Alaska is an opt-in community property state that gives both parties the option to make their property community property.

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