Kansas Community Property Trust - New Tax-Saving Tool for Kansas Married Couples
Kansas has traditionally been a “common law” state, meaning spouses each own their own property unless they’ve deliberately titled it jointly. That changed this year (2026) with the passage of House Bill 2590, which created the Kansas Community Property Trust Act. The new law gives married couples a way to opt into community property treatment, even though Kansas itself doesn’t otherwise follow community property rules.
Why does this matter? The answer comes down to taxes, specifically what happens to the basis of an asset when one spouse passes away.
The Tax Benefit
When someone dies owning property which has increased in value, such as farmland, a family business, or long-held investments, federal tax law generally resets the asset's tax value to its current market value at the date of death (as opposed to its value when originally acquired - the "basis"). This is known as a "step-up in basis." As a result, any increase in value that occurred during the person's lifetime may no longer be subject to capital gains tax, potentially eliminating years or even decades of accumulated gain.
Under ordinary Kansas ownership (joint tenancy or tenancy in common), only the deceased spouse’s half gets that step-up. The surviving spouse’s half keeps its original, lower basis.
Community property is treated differently under federal law. When one spouse dies, the entire asset gets the step-up, not just half. That means if the surviving spouse later sells the property, there may be little or no capital gain to pay tax on. By placing assets into a properly structured Kansas community property trust, married couples can now access this same full step-up in basis, without having to move to a community property state like Arizona or California.
Some Important Guardrails
This isn’t a one-size-fits-all solution, and there are real trade-offs to understand before signing:
- Amendment and revocation: Unless the trust says otherwise, neither spouse can unwind or change the trust on their own. Both typically need to agree, which is a bigger commitment than a standard revocable trust.
- Divorce: Divorce generally ends the trust, with each spouse receiving half. But there are timing rules and restrictions on how property, especially real estate or a business, can be divided.
- Creditors: Debts taken on by one spouse alone can generally only be collected from that spouse’s half of the trust; joint debts can reach the whole trust.
- Gifting: If a low-basis asset is gifted to a spouse who then passes away within a year, the step-up may not apply. Timing matters.
Who Should Consider This
This planning tool tends to make the most sense for long-married couples who hold significant appreciated assets, such as farmland, a family business, or a concentrated investment position, and who are comfortable with the idea that changes to the trust generally require both spouses’ agreement.
It works best as part of a broader estate plan, coordinated with any existing trusts, wills, and marital planning already in place, rather than as a stand-alone document. If you and your spouse own significant low-basis assets and want to explore whether a Kansas community property trust could reduce future capital gains taxes for your family, we’d welcome the opportunity to talk through whether this new tool fits your situation.
If you have questions about the Kansas Community Property Trust Act or any estate planning, contact one of Martin Pringle's estate planning attorneys.
