• "I am deeply grateful to the Masonic Village's employees, and will never be able to express my gratitude to all of them." — Catherine L.

  • "I liked my Masonic Charity Foundation charitable gift annuity so much, I opened three more. Why? I might be old-fashioned, but the scriptures have taught me the virtue of looking out for others. Knowing that the funds left in my gift annuities will care for the Masonic Village residents makes me feel wonderful." — Dorothy B.

  • "I am writing to tell you, from the bottom of my heart, just how wonderful the last two years of my mother's life were, thanks to all of you at the Masonic Village at Burlington." — Carol O.

  • "It's not just the Masonic Village's beautiful facilities and the many services that are offered to the residents – most of all, it's the employees. They are personally dedicated it seems to each and every individual here." — Catherine L.

  • "We are equally grateful for the 'loving arms of hospice' that were wrapped around our family in our hour of need." — M.W.

  • "When we decided to come to the Masonic Village at Burlington, we knew it was going to be a very big change in our lives. When we came here, we were very pleased that it was not difficult. We would recommend the Masonic Village highly to a friend." — Joseph and Bertha B.

  • "There is simply no way to express the depth of gratitude I feel for the Masonic Village at Burlington – thank you!" — Jim C.

  • "We know first-hand how very special Acacia Hospice's caregivers are, and we thank every single one of them from the bottom of our hearts." — J.M.

  • "It is with a grateful heart that we extend to you our deepest gratitude for the loving care that Acacia Hospice afforded our beloved Aunt." — M.W.

  • "It has been a source of tremendous relief that my parents were in such caring and professional hands during the final years of their lives." — Jim C.

  • "It takes a very special person to do the job Acacia Hospice's caregivers do every day. We would like you to know we think you have an incredible group of 'Angels.'" — J.M

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Monday October 15, 2018

Personal Planner

Married Couples and Property

Married Couples and Property

Mary was a surviving spouse. She and her first spouse, Ryan owned a lovely home and placed it into joint tenancy with right of survivorship. After Ryan passed away, Mary met Logan and they were married. Because she previously had owned the house in joint tenancy, Mary changed the title to joint tenancy with right of survivorship, with Logan as the other joint tenant.

Unfortunately, Mary passed away two years later. Her will gave all of her property to the children of her first marriage. However, her children, Sam and Susan, did not receive the largest asset in her estate-Mary's home. Logan was the surviving tenant and under state law he owned the home outright. He later passed on the valuable home to children from his first marriage.

Joint tenancy for married couples is very simple and quite common. However, it is not always the best plan, especially if there is a second marriage or blended family.

For first marriages, joint tenancy with right of survivorship is a very convenient way to own a home, bank account, stocks or mutual funds. However, couples should understand that there are some potential risks in holding property as joint tenants with right of survivorship. If the couple is planning to fund trusts or the estate increases to a level that it is important to create a special tax-saving trust called the bypass trust, then joint tenancy can conflict with the will or living trust provisions. Joint tenancy may also disinherit a beneficiary under the will. While joint tenancy is very simple and common, it should be used with caution.

Joint or Separate Property


Joint property is typical for any assets acquired during marriage. However, property that is inherited or brought into a marriage is usually separate property. Separate property in most states may be transferred to persons other than the surviving spouse. If a spouse inherits separate property and plans to keep it separate for inheritance purposes, it's also important to avoid commingling the separate property with other assets. If the separate property is commingled with joint property or treated as joint property by paying the taxes and other costs out of a joint checking account, then the separate property may be converted to jointly held property. This could significantly change the estate plan result.

Community Property


Several states allow married couples to own property as community property. Property acquired during a marriage in Alaska (with a written agreement), California, Idaho, Washington, Nevada, New Mexico, Texas or Wisconsin will be owned equally by husband and wife.

In Alaska, Arizona, California, Nevada, Texas and Wisconsin, the community property may be held with right of survivorship. In other states, the property is owned in joint tenancy with right of survivorship, but there is a separate agreement that states the property is community property. In both cases, when the first spouse passes away, the second spouse is now the owner without going through the probate process.

Saving Capital Gains Tax


There is a very important capital gains tax benefit for the surviving spouse if it is possible to hold the property as community property. When property that has been acquired appreciates in value, there is a capital gains tax due upon sale. For example, if stock were purchased for $25 and increased in value over several years to $100, upon sale the $75 of appreciation would be taxed as long-term capital gain.

If stock or land passes through an estate, then the person receiving the property may benefit from a step-up in basis. For example, if a share of stock bought for $25 and worth $100 now is transferred through an estate, then the cost basis to the beneficiary is also $100. He or she may sell the stock for that amount with no capital gains tax.

Tax-free Sale


With community property, a married couple could jointly purchase 100 shares of stock for $50. The 100 shares then appreciate to $200. If one spouse passes away and the 50 shares are given to the surviving spouse, he or she receives a step-up in basis on both portions and now may sell the stock for $200 with no tax.

However, in a state that does not follow the community property rules, with joint tenancy only the 50% of the stock owned by the deceased spouse gets a stepped-up basis. In effect, the stock is divided in half and the cost basis is $25 on that share with a fair market value of $100. When that stock passes through the estate, the basis is stepped up to $100 and it may be sold with no tax. But when the surviving spouse also sells the stock for $100, he or she still has $25 of cost basis and $75 of taxable gain on the stock.

Therefore, if community property status is available and a surviving spouse might desire to sell assets without paying any capital gains tax, it's important to be sure that the community property title is created.


Published September 14, 2018

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Previous Articles

Separate & Joint Property

What Do You Own?

Chronic Illness - Care of Your Property

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Planning for Senior Care

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