Community Property Trust
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What is the Community Property Trust Law?
On July 15, 2020 the Community Property Trust Act took effect in Kentucky. This law allows married couples to have their assets held in a community-property trust and classified as Community Property.
Mattingly Ford P.S.C. – A Louisville, Kentucky-based law firm – understands local and state law – helping clients maximize the legal benefits in their estate planning.
Understanding Kentucky’s Community Property Trust Act
In the United States, there are two property regimes: Community Property states and Separate Property states. The laws and regulations for each regime primarily affect what state’s tax matters, estate planning considerations, and family law issues (i.e., divorce) are. Kentucky is a Separate Property state. That means married spouses’ assets are classified as separate or marital. Note: Separate (non-marital) property belongs to one spouse because it was owned before marriage or received as a gift or through inheritance. Most everything else is Marital Property. With this law, Kentucky now joins eight other states to allow spouses to designate some or all of their assets as Community Property. Mattingly-Ford understands this law and welcomes all questions.
3 Things to Know About This Law
When people inherit assets, a tax rule called stepped-up basis provides potentially huge benefits. Inherited assets have their basis reset to a present fair market value at the moment they are passed on to an inheritor in a will.
1.
At the death of the first spouse, it permits a stepped-up basis for federal income tax purposes at 100 percent of the property the couple has elected to treat as community property.
2.
This contrasts to jointly held assets (where only 50% percent receive a stepped-up basis on the death of the first spouse).
3.
The law particularly benefits:
- Long-term married couples.
- Those who own significant appreciated property.
- Those who own significant real estate.
- Property with little or no remaining depreciable life.
Louisville-based Mattingly Ford will make sure you understand all your options regarding Kentucky’s Community Property Trust Act.
“Emily Moore was very thorough and took the time to explain everything to me and why it is so important to have an estate plan.”
-Melissa
What is the Community Property Trust Law?
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