Survivorship Rights in Arizona

See below a list of frequently asked questions when we meet with clients in our office. This will help you understand community property rules and joint tenancy rules from our state a little bit better.

Frequently Asked Questions about Survivorship Rights in AZ

If you're managing the complexities of right of survivorship in Arizona, you probably have some questions.

Understanding the differences between joint tenants and community property, as well as how capital gains taxes apply, can greatly impact your decisions.

Let's explore these common queries to clarify your options and rights.

1. Is it possible to remove the right of survivorship from a deed?

An attorney can help you with this. The right of survivorship can be removed from a deed if all co-owners involved agree to it. If they disagree, a legal process will have to be initiated in court to contest the ownership of the property.

The right of survivorship may also have tax implications, so make sure to talk to an attorney before removing or gifting property to someone else. An estate planning attorney with tax experience will be your best option.

Also, make sure to consult an attorney if you are selling the property below market value, as this can cause tax issues with the IRS, as it may be seen as a gift to the buyer.

2. What does joint tenancy with the right of survivorship mean?

Joint tenancy with the right of survivorship means that two or more persons own equal interests in the property. They are co-owners and own the property together. The last surviving person will inherit the property as specified in the deed.

This type of ownership can be particularly problematic when dealing with blended families. Children from a previous marriage will no longer be heirs if the new spouse passes away before. A right of survivorship deed is a great way to avoid probate but is also an easy way to remove heirs from the property if the surviving owner is the spouse who joined the marriage later. The property will automatically go to the surviving spouse, and the previous children will no longer have any interest in the property.

We usually recommend the creation of a living trust that becomes irrevocable after the passing of the first spouse when blended families are involved. There are different ways to ensure your estate doesn’t go through probate and that the ownership of your property remains within your bloodline.

3. What is a community property with the right of survivorship deed?

This type of deed is usually used for married couples. A right of survivorship deed allows married people to share a property title (co-ownership) where both have equal shares. When the first spouse passes away, the surviving spouse will own the property alone. By having a survivorship deed in place, probate can be avoided. Arizona is a community property state.

To avoid probate when the second spouse passes away, a different type of deed will be needed. We recommend consulting with a Probate Attorney in Arizona, Chandler, to design an estate plan that works for your needs. A right of survivorship deed is a great instrument when used correctly, but it will not completely avoid probate if not done properly.

4. Are there any tax implications with right of survivorship deeds?

We recommend that you talk to a CPA or tax attorney to understand how taxes work for your specific estate. Depending on the size of the estate and the family dynamics, a right of survivorship may or may not have tax implications.

5. What does "tenancy by the entirety" mean?

Tenancy by the entirety means that all co-owners of the property own the property 100%, and they all have the right to occupy it as joint tenants. "Tenancy by the entirety" is usually referred to as TBE. When the first owner passes away, the ownership of the property transfers to the surviving co-owner (or co-owners).

Real estate that has a "tenancy by the entirety" deed may avoid probate, but it also may unintentionally disinherit family members. This is especially true when there is a blended family with children from a previous marriage.

6. What does joint tenant in common mean?

Joint tenants in common are usually referred to as JTIC, and it usually refers to property owned where rights of survivorship do not apply. It means that each individual owns a specific part of the property, and upon their passing, the other individuals will not have a right of survivorship to that specific portion.

7. Can you be joint tenants if you are not married?

Yes, joint tenants allow two or more persons who are not spouses to own property. It allows two or more people to have an interest in the property (either real estate, personal property, or intellectual property).

8. What is the difference between joint tenancy and community property in Arizona?

When considering property ownership in Arizona for real property, it's essential to understand the distinction between joint tenancy and community property, as each has unique implications for rights of survivorship.

Joint tenant involves two or more individuals owning a property together, with each having an equal share. The defining feature here is the right of survivorship: when one tenant passes away, their share automatically transfers to the surviving tenant(s), bypassing probate. This arrangement is particularly beneficial if you want to guarantee that your property goes directly to your co-owner without legal complications.

On the other hand, community property is specific to married couples. In Arizona, any property acquired during the marriage is considered community property, owned equally by both spouses, regardless of whose name is on the title.

While community property doesn't inherently include a right of survivorship, couples can convert their community property into a community property with right of survivorship, allowing for a seamless transfer upon death.

Ultimately, understanding these differences can help you make informed decisions regarding your property ownership and estate planning in Arizona.

9. What is a joint tenancy deed Arizona?

A joint tenancy deed in Arizona is a legal document that establishes a shared ownership arrangement for two or more persons regarding a specific property. When you and your co-owners are designated as joint tenants, you each hold an equal share of the property.

This means that if one of the joint tenants passes away, their share automatically transfers to the surviving joint tenant, due to the right of survivorship. This automatic transfer of ownership is a key feature of joint tenancy deeds in Arizona.

It simplifies the process of inheritance and avoids the complexities of probate, allowing you and your co-owners to have peace of mind regarding property ownership. To create a joint tenancy deed in Arizona, it’s crucial to include specific language that outlines your intention for joint tenancy, clearly naming all joint tenants involved.

Keep in mind that joint tenancy can also have implications for liability and debts, as all joint tenants may be held responsible for obligations related to the property.

As a result, it’s wise to reflect on your financial and personal relationships before entering into a joint tenancy arrangement.

10. What is better, joint tenancy or community property?

Choosing between joint tenancy and community property depends on your unique circumstances and goals for property ownership.

Joint tenancy allows you and your co-owner to hold property together with right of survivorship, meaning that when one owner passes away, the other automatically inherits their share without going through probate. This can be a significant advantage for those seeking probate avoidance.

On the other hand, community property ownership is typically available to married couples and treats property acquired during the marriage as jointly owned. This method can offer benefits regarding tax implications and equal ownership rights.

However, community property doesn't automatically transfer the deceased spouse's share to the surviving spouse; instead, it may require probate unless a specific estate plan is in place.

Ultimately, your choice should reflect your relationship dynamics, financial goals, and estate planning preferences. If you prioritize ease of transfer upon death and want to bypass probate, joint tenancy could be the better option.

Conversely, if you aim for equal ownership and tax advantages, community property ownership may suit your needs better.

Consider consulting with a legal professional to make the best decision for your situation.

11. How capital gains taxes work with a community property ownership deed?

Understanding how capital gains taxes work with a community property ownership deed is essential for any co-owners looking to navigate their financial responsibilities effectively.

In a community property state like Arizona, property acquired during a marriage is typically considered community property. This means both spouses own the property equally, regardless of whose name is on the title.

When you transfer property, the capital gains tax implications can be significant. If you sell a property that's classified as community property, you might benefit from a step-up in basis, which adjusts the property's value to its current market rate at the time of one owner's death.

This means if you sell the property, you could potentially avoid paying capital gains tax on the appreciation that occurred during the deceased owner's lifetime.

In contrast, joint tenancy includes rights of survivorship, which may not provide the same tax benefits. Understanding these nuances helps you make informed decisions about ownership structures and potential tax liabilities.

Always consult an experienced estate planning attorney to guarantee you fully understand your obligations and options in relation to capital gains taxes on community property.

12. How capital gains taxes work with a joint tenancy deed Arizona?

When it comes to managing capital gains taxes with a joint tenancy deed in Arizona, the rules can be quite different from other forms of property ownership. As a joint tenant, you and your co-owner share equal rights to the property title, which can impact tax implications when the property is sold.

If one of the joint tenants passes away, the surviving tenant automatically inherits the deceased's share, avoiding probate. This transfer can have significant tax benefits, as the property receives a step-up in basis. Fundamentally, the property's value is adjusted to its fair market value at the time of the deceased's passing, reducing potential capital gains taxes if the property is sold later.

It's essential to understand that capital gains taxes are calculated based on the difference between the selling price and the adjusted basis. Consequently, when you sell a property held in joint tenancy, you may owe capital gains taxes only on the appreciation that occurred after the step-up in basis.

Always consult a tax professional or real estate expert to navigate these complexities and guarantee you're making informed decisions regarding your property title and potential tax liabilities.

13. What is a disadvantage of joint tenancy ownership?

While joint tenancy offers some benefits, such as the right of survivorship and potential tax advantages, it also comes with notable disadvantages. One significant drawback is the lack of control over the property for joint tenants. If you co-own property with another person, they've equal rights to make decisions regarding the property, which can lead to conflicts. For instance, if you want to sell the property but your co-owner disagrees, you're both stuck.

Another disadvantage involves the potential financial implications. If one joint tenant incurs debt or faces a lawsuit, creditors may target the jointly owned property, putting your investment at risk.

Additionally, while joint tenancy helps in avoiding probate for the surviving co-owner, it doesn't eliminate other complications. The surviving co-owner might face challenges in managing the property if there are disagreements over its use or if the original co-owner had unpaid debts.

Ultimately, while joint tenancy can simplify asset transfer upon death, it's important to weigh these disadvantages against the benefits. Understanding the implications of joint tenancy ownership can help you make informed decisions about your property.

14. What happens to a jointly owned property if one owner passes away in Arizona?

The right of survivorship provides a clear resolution for jointly owned property in Arizona when one owner passes away.

In a joint tenancy arrangement, if one of the joint tenants dies, the property doesn't go through probate. Instead, it automatically transfers to the surviving joint tenants. This legal mechanism guarantees that the surviving owners retain full ownership without the delays and costs associated with probate proceedings.

For example, if you and a co-owner hold property as joint tenants and one of you passes away, the entire interest in the property will automatically transfer to you, the surviving joint tenant. This transfer occurs by operation of law, meaning you won't need to take any specific action to secure your ownership.

It's important to note that this right of survivorship only applies if the property is specifically held in joint tenancy with the right of survivorship.

If the property is held differently, such as in a tenancy in common, the deceased's share would instead pass according to their will or Arizona intestacy laws.

Understanding these aspects can help you make informed decisions about property ownership in Arizona.

15. How to sever a joint tenancy with right of survivorship in Arizona?

Severing a joint tenancy with the right of survivorship in Arizona involves a clear legal process that can change how you and your co-owner hold the property.

If you're looking to sever a joint tenancy, you must take specific steps to guarantee the change is legally recognized.

First, you'll want to prepare a written document that clearly states your intention to sever the joint tenancy. This document should be signed and dated by you—the joint tenant seeking the change.

Next, you'll need to file this document with the county recorder's office where the property is located.

It's also important to notify your co-owner about your decision to sever the joint tenancy.

Once the document is recorded, the joint tenancy is effectively severed, and you and the other co-owner will hold the property as tenants in common, losing the right of survivorship.

This means that if one of you passes away, your share of the property can be inherited by your heirs instead of automatically transferring to the surviving joint tenant.

Consulting with a real estate attorney can also help guide you through this process to guarantee everything is done correctly.

Conclusion

In conclusion, understanding the right of survivorship in Arizona can greatly simplify property ownership and inheritance. By knowing the differences between joint tenancy and community property, as well as the implications of each, you can make informed decisions for your estate planning. Whether you choose joint tenancy for its advantages in avoiding probate or consider the tax implications, being aware of how to navigate these options is key to effective property management.

Call Citadel Law Firm today to talk about your estate planning

Whether you are part of a blended family or a single person, we will design the perfect estate planning solution for you. Citadel Law Firm specializes in estate planning and probate. Our experienced estate planning attorneys in Chandler, AZ, will be pleased to assist you.

Call (480) 565-8020 or click the button below to schedule your free estate planning consultation. We are here to help you.