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Community Property Rules Could Cost Retirees a Full Tax Step-Up

Original: Big Mistake: A 72-Year-Old Couple Will Hold $600,000 of Stock in a Joint Account. When He Dies, Only Half Will Get the Tax-Free Step-Up. Across the State Line in Texas, All of It Would

A personal finance commentary warns that a 72-year-old couple holding $600,000 in stock in a standard joint account could lose a major tax benefit. Under common-law joint ownership, only the deceased spouse's half of the assets receives a tax-free step-up in cost basis when he dies. Had the couple lived in a community property state such as Texas, both halves would qualify, eliminating substantial capital gains taxes for the surviving spouse.

Why now: Estate and capital gains tax planning is a live concern for aging retirees, and the state-by-state difference shows how location can cost families six figures.

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• Big Mistake: A 72-Year-Old Couple Will Hold $600,000 of Stock in a Joint Account. When He Dies, Only Half Will Get the Tax-Free Step-Up. Across the State Line in Texas, All of It Would · 24/7 Wall St.

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