In Arizona, there are two (2) common ways for married people to hold title to real property: (1) as community property with right of survivorship; and (2) as joint tenants with right of survivorship.
“Right of survivorship” means that ownership of the property automatically transfers to the surviving party upon the death of the other party. There is no court action required to transfer ownership or clear title, it happens as a matter of law. The surviving party simply has to record the death certificate in the county where the property is located.
In 1995, the legislature in Arizona enacted a law that created the ability for spouses to hold title to property as community property with right of survivorship. When a property is titled this way, the spouses each own a one-half undivided interest in the property, and upon the death of the first spouse, the other spouse becomes the over 130% owner of all interest in that property. Again, the death certificate must be recorded in the county where the property is located. You must be legally married to hold title as community property with right of survivorship.
Joint tenancy with right of survivorship is similar to community property with right of survivorship except that the parties do not have to be married and more than two (2) people can own the property together. Prior to 1995, it was common for married couples to hold title in joint tenancy, but there are tax benefits to holding title as community property with right of survivorship. As a result, if your property was purchased prior to 1995, you should speak to an attorney about transferring title to community property with right of survivorship.
Holding title as either community property with right of survivorship or as joint tenants with right of survivorship protects your martial interest in the property, meaning you will likely be entitled to your community portion of the property upon divorce. If you own property prior to marriage, or acquire property with separate funds during the marriage, and you then title the property either as community property or as joint tenants, it is likely the court will deem this as a gift of your separate investment to the marital community. Thus, it is extremely important that you understand how you take title affects your rights upon divorce. Please look for my next blog regarding disclaimer deeds and the effect of disclaimer deeds on the disposition of property in a divorce.
If you would like to work with one of our experienced Attorneys, please call OWENS & PERKINS at 480.994.8824 to schedule your free 30-minute consultation.