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.
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.