Florida has enacted new legislation allowing married couples to create a Community Property Trust (CPT). Currently (except in common property states), when the first spouse dies, their own assets receive an increase in value on the date of death. Assets held in joint ownership benefit from this increase based on half of the value. According to the new law, if a couple creates and finances a CPT, all assets of the CPT will be reassessed on the date of the death of the first spouse. The result? Capital gains disappear. This adds flexibility to the surviving spouse, who can now sell any of the assets without incurring capital gains tax.

The CPT law requires that on the first death, half of the assets be transferred in accordance with the will of the deceased spouse and the other half in accordance with the will of the surviving spouse. For this reason, CPT may not be a good option for some second marriages.

In addition, creditors of either spouse can reach half of the assets held in a CPT (other than family assets). Thus, a CPT is not a good choice if either spouse has creditor concerns.

For married couples with the same intended beneficiaries, appreciated assets, and no creditor issues, a CPT can provide significant tax savings upon the death of the first spouse.


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