@happyDonate , having read through your above question, I come back to the suggestion that a consult with an attorney is required.
I say this because and as I understand , the reason behind the step-up of basis is to affect a tax free transfer/ distribution of decedent's estate without inheritance ( without specifically creating an inheritance tax reg. ). To achieve this though you must be able to classify the asset as part of the Estate of the decedent. Community property states further merge / homologate this with creating marital property concept.
Now you have to see which of the decedent's assets go into the his/her Estate. Co-Tenancy of assets between husband and wife generally does not create any complications . However, Joint Tenancy of assets become a special case because the asset passes to "other " tenants and not to the Estate on the demise of one tenant. Thus Joint Tenancy without right of survival, gets in trouble because the demised tenet's share of the Asset is distributed to the other x number of tenants. This is why I strongly suggest a discussion with an attorney.
pk
