by Phoenix attorney Christopher A. Combs, partner with Combs Law Group, P.C.
Question: I am a widow, and my husband passed away almost two years ago. I plan to continue to live in our Phoenix home, and leave this home as well as two rental houses in Chandler to my two adult children. The deeds to these three properties are currently in the name of my deceased husband and me as community property with right of survivorship. My questions are the following. One, should I change the three deeds to beneficiary deeds? Two, when I die, will there be a 100% step-up in basis of my Phoenix home as well as the two rental houses in Chandler so that no taxes will be owed? Three, when I record the beneficiary deeds to my two adult children for all three properties, is it necessary to delete the previously recorded deeds on the three properties?
Answer: One, you do not need to ” change” the current deeds on the three properties to beneficiary deeds. You can simply now execute and record three beneficiary deeds to your two adult children. These beneficiary deeds will not go into effect until your death. Two, upon your death, there should be a 100% step-up in basis on all three properties, including your Phoenix home. The result will be that, if your two adult children sell all three properties after your death, there should be little or no capital gain taxes owed. Three, after you record the beneficiary deeds on all three properties to your two adult children, it is not necessary to ” delete” the previous recorded deeds. As I said above, the beneficiary deeds will only become effective upon your death.