What is Community Property with a Right of Survivorship?
Community property with a right of survivorship vests the surviving spouse with outright ownership of the decedent's one-half community property interest just like joint tenancy with the relative tax advantages of holding title as community property. If a joint tenancy accomplishes your objectives, community property with a right of survivorship might be even better because it not only avoids probate but can provide a step-up in basis.
If a married couple combined estates is less than the applicable exclusion amount , there is usually no need for estate tax planning. Even in a estate with a need to avoid estate taxes, a community property with a right of survivorship deed may preferred to transfer to the surviving spouse the personal residence.
However, holding title as community property with right of survivorship is not always superior to holding title in joint tenancy between spouses because certain creditor's claims (e.g. not consensual secured loans) against the deceased spouse are cut off. Upon death of a joint tenant, the jointly held property will then pass to surviving spouse not subject to these creditor's claims unlike title to property held in community with right of survivorship property.
Further, if you own property which you acquired prior to marriage or by gift or inheritance during marriage, that is your separate property. If you deed your separate property into community property, you will be transmuting or changing your separate property interest which you own 100% into a community interest in which you have only a one half interest with the same control problems as a joint tenancy.
A community property deed with a right of survivorship deed is available on this site for download subject to this website's general disclaimer and the other specific limitations discussed above. The deed must be completed with a legal description included on it or attached as Exhibit A, signed by each spouse on title to the property, notarized, and recorded with the County Recorder's Office for your property. A Preliminary Change of Ownership Report should be presented with the deed to the Recorder's Office and box A in Part 1 should be checked to indicate that this deed is exempt from property tax re-assessment as a exempt spousal transfer. The Preliminary Change of Ownership Report should be obtainable from your local County Recorder's or Assessor's office.
If a community property with a right of survivorship deed doesn't accomplish your objectives, put your home in a revocable trust to avoid probate.