Question

Which of the following is NOT true of joint tenants with right of survivorship ownership of assets between spouses?

a. The full value of property held in joint tenancy between spouses is includable in the gross estate of the first to die.
b. While assets are passed to the spouse, financial, and non-financial guidance is not provided for.
c. Final asset distribution to heirs of the surviving spouse is not planned for.
d. There is a stepped-up basis on only 50% of the asset at death of first spouse in non-community property states.

Answer 1

In joint tenants with right of survivorship ownership of assets between spouses, there is a stepped-up basis on the entire asset at the death of the first spouse, not just 50% in non-community property states.

Step-by-step explanation:

In joint tenants with right of survivorship ownership of assets between spouses, one of the statements that is NOT true is that there is a stepped-up basis on only 50% of the asset at the death of the first spouse in non-community property states.

A stepped-up basis refers to the adjustment of the value of an asset to its fair market value at the time of the owner's death. In joint tenants with right of survivorship ownership, the entire asset receives a stepped-up basis upon the death of the first spouse, not just 50%. This means that the cost basis of the asset is increased, potentially resulting in lower capital gains taxes if the asset is later sold.

For example, if a couple owns a house as joint tenants with right of survivorship and one spouse passes away, the surviving spouse receives a stepped-up basis for the entire value of the house. If the surviving spouse later sells the house, they would only owe capital gains taxes on any appreciation in value from the new stepped-up basis, not from the original purchase price.