How is Arizona Community Property Transferred at Death?
Arizona is a community property state. With certain exceptions, all property owned by either spouse during the marriage is deemed the joint property of both. But when one spouse dies, does anyone but the other spouse have a right of inheritance? And if so, how is it determined? The answers depend on whether the community property is owned subject to a right of survivorship.
Unless otherwise specified, community property in Arizona is held by both spouses equally. Upon the death of one spouse, every asset that is community property is divided in half. One half of the property is retained by the surviving spouse and the other half is passed down to the heirs of the deceased spouse, either by will or trust or by intestacy. For example, a home owned by both spouses would end up with the surviving spouse owning half and the other heirs owning smaller shares.
But spouses can also own community property with right of survivorship. This is known as a tenancy by the entirety and it must be specified in the property’s title or other ownership document. Once one of the spouses passes away, the survivor is vested with 100 percent ownership of the property.
However, a spouse has the right to leave his or her share of a community-property asset to specified beneficiaries via a will or a trust. That bequest takes precedence over the survivorship clause, so the surviving spouse would end up with only half. Similarly, if a spouse dies without a will or trust, his or her children from a prior marriage, as well as their heirs, have a right to make intestate claims against the decedent’s half interest in the property.
The two types of community property ownership have their benefits and drawbacks. For example, one spouse alone cannot incur debts against community property with right of survivorship, and if they do, such assets are shielded from creditors’ claims during probate. Community property with right of survivorship also enjoys certain income tax advantages. It is a good idea to consult with an experienced estate planning attorney to determine which type of ownership is best suited for your situation.
If you need assistance with estate planning that involves community property, the Law Firm of Joseph M. Udall, PLC in Mesa, Arizona can give you sound and practical advice. For a free consultation, all us at 480-500-1866 or contact us online. Saturday and evening appointments are available.