Alaska Community Property Agreements and Trusts

A Smarter Way to Protect What You’ve Built Together

Many married couples in Alaska are surprised to learn that the way their assets are titled can have major tax consequences down the road. If you’ve owned your home or investments for years, you may be sitting on substantial appreciation. That growth is good news—but it can also create a future tax burden if not handled correctly.

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Alaska offers a unique solution for mitigating potential capital gains at the death of a first spouse that most states do not: community property. When used properly, the Alaska Statutes allow spouses to protect their shared assets and reduce future taxes by electing community property treatment for highly appreciated, jointly held assets of their choosing. At Foley Pearson Riekkola Iverson, we help couples understand whether a Community Property Agreement or Community Property Trust fits their plan—and if it does, we make sure it is implemented correctly from the start.

What Is a Community Property Agreement?

Alaska is one of the few states that allows married couples to elect community property treatment through a formal agreement. By doing so, spouses can agree to treat some or all of their assets—such as real estate, brokerage accounts, or business interests—as community property for legal and tax purposes.

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This election becomes especially powerful upon the death of the first spouse. Under federal tax law, community property receives a full step-up in basis to its current fair market value. This means that for assets held as community property:

• Capital gains built up over time are effectively erased
• The surviving spouse can sell the asset with reduced or no capital gains tax
• The full value of the asset can be preserved for future use or inheritance

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At Foley Pearson Riekkola Iverson, we draft clear, legally enforceable agreements that reflect your intentions and protect your interests. These agreements can stand alone or be incorporated into a Community Property Trust as part of a broader estate plan.

When Is a Community Property Trust Appropriate?

A Community Property Trust combines the tax benefits of community property with the legal advantages of a revocable living trust. This type of trust allows couples to:

• Retain full control of their assets during life
• Name successor trustees in the event of incapacity or death
• Avoid probate entirely for trust-owned property
• Secure a full basis adjustment at the death of the first spouse
• These trusts are especially valuable for couples with:
• Appreciated real estate or investment portfolios
• Rental or commercial property
• Long-held business interests
• A goal of minimizing tax exposure while avoiding probate

As part of your estate planning process, our attorneys will review your assets and help you determine whether a Community Property Trust is the right fit for your situation.

What Happens Without This Type of Planning?

Without a Community Property Agreement or Trust, Alaska married couples generally hold assets as joint tenants with rights of survivorship or as tenants by the entirety. While these forms of ownership offer survivorship benefits, they do not qualify for an adjustment in basis.

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This means that when the surviving spouse later sells an inherited home, rental, or stock position, they may owe significant capital gains taxes on decades of appreciation. Depending on the size of the asset, this could result in tens or even hundreds of thousands of dollars in tax liability.

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A standard revocable trust or Will-based plan does not provide this tax protection. Community property planning is the only mechanism under Alaska law that achieves the full basis adjustment.

Why Work with Foley Pearson Riekkola Iverson?

We are one of the few Alaska law firms that routinely advises on community property elections and incorporates them into our clients’ estate planning strategies. Our clients benefit from:

• A planning process that evaluates both legal and tax consequences
• Attorney-led review of asset ownership and titling
• Customized agreements and trust structures
• Coordination with your accountant and/or financial advisor when needed
• Ongoing support through our Generations Program to keep your plan aligned over time

We do not offer one-size-fits-all solutions. We help you understand the implications, weigh your options, and make informed decisions based on your estate and long-term goals.

Start with the Right Knowledge, Start With Our Workshop

If you own appreciated property and want to explore ways to reduce future tax exposure, our team is here to help. Foley Pearson Riekkola Iverson offers free, attorney-led estate planning workshops where we introduce core planning tools—including community property agreements—and explain how they work in the Alaska context.

This is a planning opportunity worth understanding. We’ll help you get the full picture.