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WAYS TO TAKE TITLE IN ARIZONA. When you purchase your Tucson home you will find a place on the Tucson Real Estate Purchase Agreement that asks you how you want to take title to your Arizona property. It is ok if you do not know at the time you sign the real estate purchase contract how you are going to take title to Arizona property. However, prior to the closing you will have to notify the escrow officer and your lender how you plan to take title to the Tucson Arizona home you are purchasing. As your Tucson Realtor, I cannot advise you as to how to take title to Arizona property, as this would be considered giving legal advice. However, I can provide you with the following explanation of the different ways to take title to property in Arizona. You should be aware when you purchase a Tucson home there are a number of options as to how you may take title, each of which can have significant legal, tax and estate planning consequesnces. I recommend you seek competent professional advice from your accountant or attorney if you have questions regarding how to take title to property in Arizona, or your Tucson home.
Community Property Taking title as community property is available only for persons with a valid marriage. In Arizona, as a married couple, unless you specify otherwise, you will hold property as community property. Each spouse holds an undivided one-half interest in the community property. Each spouse may convey (devise) by his/her will one-half interest in the community estate property. However, Arizona community property law requires the signatures of both spouses to convey or encumber the community real property. Accordingly, one spouse may not partition the property by selling his or her interest. Under Arizona law, property acquired by a spouse during a marriage is presumed to be community property unless it was acquired by gift, device or descent. Upon death, the community property is subject to probate and is entitled to a step up tax basis as of the date of death.
Community Property with the Right of Survivorship Taking title as Community Property with the Right of Survivorship is nearly identical to taking title as Community Property with the exception that the property passes to the surviving spouse outside of probate and the property cannot be conveyed (devised) by will.
Joint Tenancy with the Right of Survivorship Joint Tenancy with Right of Survivorship is one way both married and non-married persons can take title. With this form of title each joint tenant owns an equal and undivided interest in the property. Both joint owners’ signatures are required to convey or encumber the property. One joint tenant cannot partition the property by selling his or her joint interest nor may he or she convey (devise) the interest by a will. At the death of one of the joint tenants the property passes to the surviving tenant outside of probate. The deceased tenant’s share is entitled to a stepped up tax basis as of the date of death.
Tenancy in Common With Title by Tenancy in Common the parties need not be married and there may be more than two tenants in common, Each Tenant in Common holds an undivided fractional interest, which need not necessarily be equal, in the property. Each Tenant’s fractional share can be conveyed or encumbered without the signature of the other Tenants. All the Tenants signatures are required to encumber the whole property. Each Tenant’s interest can by conveyed (devised) by a will and in fact is conveyed by will at the death of such Tenant. Such fractional interests are subject to probate at death and receive a step up basis as of the date of death.
Sole and Separate This method of ownership is generally for an unmarried person taking title to property with no other owners. A married person can acquire title as sole and separate if the property is owned before marriage or acquired after marriage by gift, devise, descent or specific intent. If a married person does acquire title as sole and separate property, his or her spouse must execute a disclaimer deed to avoid presumption as community property.
Legal Entities Parties may choose to hold title in the name of a separate legal entity, such as: a corporation; a limited liability company; a partnership, or a trust. Each particular method of taking title has certain significant legal and tax consequences. Accordingly, I urge you to obtain advice from an attorney or other qualified professional before taking title to property in such a manner.
Beneficiary Deed A fairly recent change in Arizona law created a new type of Arizona real property deed known as the Arizona Beneficiary Deed. By signing and recording an Arizona Beneficiary Deed, an owner of an interest in real property located in Arizona may cause the owner's interest in the real property to be conveyed to people or entities on the owner's death. The interest in real property conveyed by a Beneficiary Deed does not take effect until the death of the owner, at which time that interest transfers automatically by law to the designated grantee(s) named in the Beneficiary Deed, thus allowing the property to avoid probate. There can be more than one owner and more than one beneficiary. Further, the conveyance to the beneficiary may be in any of the above-mentioned title forms, i.e., right of survivorship, joint tenant, etc. The Beneficiary Deed creates some estate planning opportunities for property owners in certain situations that would have otherwise been available only by creating a living trust. Again, I urge you to contact your attorney for additional information about the Beneficiary deed if you have further questions.
DISCLAIMER: The information contained herein is intended for informational purposes only and is not intended as legal advice. The form of title to which you take property has important legal, estate planning and tax consequences. You are urged to seek competent counsel if you have questions about how to take title in Arizona. Finally, the information contained herein is believed to be accurate but is not guaranteed.
© The text herein is copyrighted by Tucson Realtor Mel Whitford, 2005. All Rights Reserved.
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