I recently learned about the step up in cost basis a child receives when inheriting a brokerage account from a deceased parent. Their cost basis is now the fair market value on the date of the owner's death, which of course could result in huge, un-taxed gains since the original purchase many years ago.
From my reading, a spouse is entitled to the same step up in basis \*only if the brokerage account was solely owned by the deceased spouse - NOT if it was a jointly owned account.\*
I just so happened to have a brokerage in only my name. And today my wife opened one, only in her name. Is this how it works? If either of us happens to die, the other would inherit the brokerage and get a step up in basis? This seems like a huge advantage, based on a small detail that would be easy to overlook. I would guess most spouses have joint accounts for simplicity and perceived protection - I would have added her to my own if not for learning about this step up in basis.
Thanks for any insight!
(To be clear, I am not looking for personal financial advice, but rather other people's understanding of the rule, and whether I understand it correctly, in a general sense.)