TAX PLANNING WITH CONSENSUAL COMMUNITY PROPERTY: ALASKA'S NEW COMMUNITY PROPERTY LAW

Alaska's new community property law, which permits married residents to elect a community property regime, is analyzed. The tax aspects when a resident establishes a community property trust are analyzed. Specifically, the qualification of transfers to the trust for the federal estate and gift tax marital deduction and the consequences of classification of the trust as a grantor trust for federal income tax purposes are discussed. It is concluded that because an election for community property means the assets will be divided equally in the event of divorce, only long-term, stable couples will designate their assets as community property under Alaska law.