Nevada Community Property: How It Affects Your Estate Plan

Nevada is one of nine community property states, and this single legal distinction shapes every estate planning decision married couples make — from how your home is titled to how much your heirs pay in capital gains tax after you die. Understanding the line between community and separate property is not optional if you want your estate plan to work the way you intend.

What Counts as Community Property in Nevada

Under NRS 123.220, community property includes virtually everything acquired by either spouse during the marriage through labor, skill, or effort. That covers wages, business income, real estate purchased with marital funds, retirement contributions made during the marriage, and investment gains on community assets.

Separate property — which each spouse owns individually — includes assets owned before the marriage, anything received during the marriage as a gift or inheritance, and personal injury awards. Under NRS 123.130, separate property stays separate as long as it is not commingled with community assets.

The distinction matters because each spouse already owns exactly half of all community property. You cannot disinherit your spouse from their community property share through a will or trust — they already own it. You can only dispose of your own half.

The Double Step-Up in Basis Advantage

This is where Nevada's community property status creates a significant tax benefit that most transplants from common law states do not realize they have.

When one spouse dies in a common law state and property is held in joint tenancy, only the deceased spouse's half gets a stepped-up cost basis for capital gains purposes. The surviving spouse's half retains the original purchase price.

In a community property state like Nevada, both halves of community property receive a stepped-up basis to fair market value at the first spouse's death — under IRC Section 1014(b)(6). On a home purchased decades ago for $150,000 that is now worth $600,000, the difference between a single step-up ($225,000 in taxable gain) and a double step-up (zero taxable gain) can save the surviving spouse tens of thousands in capital gains taxes.

To claim this benefit, the property must be titled as community property. Joint tenancy with right of survivorship, which is how many couples default to titling their home, may not qualify. The safest approach is titling property as "community property with right of survivorship," which gives you both the automatic transfer at death and the double step-up.

How Community Property Interacts with Intestacy

If a spouse dies without a will in Nevada, community property passes entirely to the surviving spouse — the decedent's half goes to their surviving spouse automatically under NRS 123.250.

Separate property follows different rules under NRS Chapter 134. If the decedent has one child, the surviving spouse gets half the separate property and the child gets the other half. With two or more children, the spouse receives one-third and the children split the remaining two-thirds.

This default split is where blended families face the biggest risks. A spouse who remarries and acquires separate property (from a prior home sale, an inheritance, or premarital savings) may unintentionally disinherit their biological children if they die without a will — because community property goes to the current spouse and separate property gets split in fractions that may not match their wishes.

Commingling: The Fastest Way to Lose Separate Property Status

Separate property loses its protected status when it gets mixed with community assets in a way that makes it impossible to trace. Common commingling scenarios in Nevada:

• Depositing an inheritance into a joint checking account used for household expenses
• Using premarital savings as a down payment on a jointly-titled home without a written agreement
• Reinvesting separate property dividends into a jointly-managed brokerage account

Once commingled, the burden falls on the spouse claiming separate property to trace the original contribution — a factual question that Nevada courts resolve asset by asset. Without documentation, courts presume the asset is community property.

Protecting Both Spouses in Your Estate Plan

Married couples in Nevada should review three things before assuming their estate plan handles community property correctly:

Property titles. Check every deed, account registration, and vehicle title. For the double step-up, title your home as community property with right of survivorship — not plain joint tenancy. Clark County and Washoe County recorder offices can confirm how your deed is currently titled.

Separate property documentation. If either spouse brought significant assets into the marriage, maintain written records — bank statements from before the wedding, inheritance letters, gift documentation. A one-page transmutation agreement under NRS 123.220 can formally convert community property to separate property or vice versa if both spouses agree.

Beneficiary designations. Community property rules apply to the underlying asset, but beneficiary designations on retirement accounts and life insurance override the will. A surviving spouse who was removed as beneficiary on a 401(k) may still have community property rights to the contributions made during the marriage — but enforcing those rights requires litigation.

The Nevada Basic Estate Planning Kit includes a community property reference guide and asset-titling checklists designed specifically for Nevada couples, so you can verify your titles match your plan without hiring an attorney for a preliminary review.

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