Know your options.
Before closing escrow on a purchase of real property, Arizona buyers must determine how they wish to hold the title. Below is a list of the options available and a brief description of each.
Per Section 3 of the Arizona Residential Resale Real Estate Purchase Contract, “Taking title may have significant legal, estate planning and tax consequences.” Therefore, The Hill Group recommends that all buyers obtain professional advice from an attorney and/or tax advisor to determine how their title should be vested.
Arizona is a community property state. And so, property acquired by married persons is presumed to be community property unless legally specified otherwise.
Community Property
Only two married persons may choose Community Property. Conveyance requires written consent of both spouses, and separate interest cannot be conveyed except upon death. On co-owner’s death, ½ belongs to survivor in severalty and ½ goes by will to decedent’s devisee or by succession to survivor.
Community Property with Right of Survivorship
Only two married persons may choose Community Property with Right of Survivorship. Right of survivorship may be terminated pursuant to the same procedures by which a joint tenancy may be severed. Upon death of spouse, his or her interest passes to the surviving spouse, without administration, subject to the same procedures as property held in joint tenancy.
Joint Tenancy with Right of Survivorship
Any number of persons (married or not) may hold title in Joint Tenancy. Conveyance by one co-owner without the others breaks the joint tenancy. On co-owner’s death, his or her interest ends and cannot be disposed of by will. The survivor owns the property by survivorship.
Sole and Separate
An individual or married person may take title as Sole and Separate. If a married person acquires title as sole and separate property, his or her spouse must execute a disclaimer deed to avoid the presumption of community property.
Tenancy in Common
Any number of persons (married or not) may acquire title as Tenancy in Common. Each co-owner’s interest may be conveyed separately by its owner. On co-owner’s death, his or her interest passes by will to devisee or heirs. There are no survivorship rights.
Title Holding Trust
Individuals and groups of persons may choose to hold title in the name of an entity such as a corporation, limited liability company (LLC), partnership, or trust. Designated parties within the trust agreement authorize the trustee to convey property. A beneficiary’s interest in the trust may be transferred. Successor beneficiaries may be named in the trust agreement, eliminating the need for probate.
The Hill Group has provided these comparisons for informational purposes only. No representation is made as to the legal validity or adequacy of any of the information contained herein. The Hill Group does not give legal or tax advice.
