I know a little about this. In CA if you hold as the property as CP, when one spouse dies the basis on the ENTIRE property will be stepped up to fair market value. Meaning you will likely pay much less capital gains tax when you sell it. If the property is not held as CP only the basis of the spouse who dies will be bumped up to FMV. Typically, the basis is what you paid for the property, cost basis. Thus, if the value goes up you pay the difference between your “basis” and what you sell for. However, at death the basis of the property owner is stepped up to FMV.
If you hold as joint tenants (as opposed to tenants in common, you should confirm) and one of you dies, the property AUTOMATICALLY transfers to the other person upon death. As such, if you got divorced but both still owned the property and one of you died, the other’s heirs would get nothing.
None of this matters that much unless you plan to keep the property for a long time or something unfortunate happens.
I might talk to an attorney if you are concerned. I am not sure I have all this perfectly straight.
Also, I believe you can later put property into a trust regardless of how you take title now. Watch what Congress does with the estate tax this year.
