Basis in HSA on death of spouse

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    [Posted earlier in Retirement forum. Perhaps this one is more appropriate.]

    On the death of a spouse in a community property state, does an HSA receive a step-up in basis on the death of a spouse? Assume the HSA was created after the marriage began, and funded entirely with community property assets. This is in California, by the way, which taxes HSA distributions and so the basis is relevant. Thanks.


    couldn’t find any links but I think so. HSA is CA is just another taxable account so you treat it differently than you do Federally.

    Alan S.

    I agree. As long as the HSA is otherwise considered to be CP, it should get a 100% basis adjustment upon the death of the HSA owner. Note that retirement accounts are also treated as CP even though titled just to just one individual, although basis adjustment does not apply to retirement accounts in the first place.


    If your beneficiary is your spouse, then your HSA, upon death, becomes your spouse’s HSA. The surviving spouse can continue to access HSA funds, and distributions for qualified medical expenses will be tax free, the same way they would be if distributed to the deceased account owner.

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