WAYS TO TAKE TITLE IN ARIZONA

Note:  Arizona is a community property state.  Property acquired by a husband and a wife is presumed to be community property unless legally specified otherwise.  Title may be held as "Sole and Separate".  If a married person acquires title as sole and separate, his or her spouse must execute a disclaimer deed to avoid the presumption of community property.  Parties may choose to hold title in the name of an entity; e.g., a corporation, a limited liability company, a partnership (general or limited), or a trust.  Each method of taking title has certain significant legal and tax consequences.  Therefore, you are encouraged to obtain advice from an attorney or other qualified professional.

Community Property

• Requires a valid marriage between two persons.
• Each spouse holds an undivided one-half interest in the estate.
• One spouse cannot partition the property by selling his or her interest.
• Requires signatures of both spouses to convey or encumber.
• Each spouse can devise (will) one-half of the community property.
• Upon death, the estate of the decedent must be "cleared" through probate, affidavit or adjudication.
• Both halves of the community property are entitled to a "stepped up" tax basis as of the date of the death.

Joint Tenancy with the Right of Survivorship

• Parties need not be married; may be more than two joint tenants.
• Each joint tenant holds an equal and undivided interest in the estate, unity of interest.
• One joint tenant can partition the property by selling his or her joint interest.
• Requires signatures of all joint tenants to convey or encumber the whole.
• Estate passes to surviving joint tenant outside of probate.
• No court action required to "clear" title upon the death of joint tenant(s).
• Deceased tenant's share is entitled to a "stepped up" tax basis as of the date of death.

Community Property with the Right of Survivorship

• Requires a valid marriage between two persons.
• Each spouse holds an undivided one-half interest in the estate.
• One spouse cannot partition the property by selling his or her interest.
• Requires signatures of both spouses to convey or encumber.
• Estate passes to the surviving spouse outside of probate.
• No court action required to "clear" title upon the first death.
• Both halves of the community property are entitled to a "stepped up" tax basis as of the date of death.

Tenants in Common

• Parties need not be married; may be more than two tenants.
• Each tenant in common holds an undivided fractional interest in the estate.  Can be disproportionate; e.g. 20% and 80%, 60% and 40%, etc.
• Each tenant's share can be conveyed, mortgaged, devised to a third party.
• Requires signatures of all tenants to convey or encumber the whole.
• Upon death, the tenant's proportionate share passes to his or her heirs by will or intestacy.
• Upon death, the estate of the decedent must be "cleared" through probate, affidavit or adjudication.
• Each share has its own tax basis.