What Are The Different Ways To Take Title As A Married Couple

There are 4 different ways to take title in Arizona as a Married Couple and each has it's own set of pros and cons. Here are the 4 different ways explained to help you make your decision as to how you'd like to take title to your new home!

1. Community Property -

Arizona is a Community Property State which means that everything once married belongs to both spouses. When you are looking at taking Title as Community Property, you must be married legally. Each spouse will then hold an equal 1/2 interest in the property. This also means that as a spouse, you CANNOT sell your half interest to another party. This also requires the signature of both spouses to sell the property or to encumber it (place a lien on the property). Each spouse can however will their half of the community property. If, heaven forbid, one of the spouses dies, you must clear the title through probate. Both halves of the community property are entitled to a "stepped up" tax basis as of the date of death as well.

2. Community Property with Right of Survivorship

This includes everything listed above under Community Property except that the estate passes to the surviving spouse outside of probate and there is no court action required to clear the title upon the first death.

3. Joint Tenants/ Tenants in Common

This way of taking title does not require the parties to be married and can be more than 2 people. Each tenant in common holds an undivided fractional interest in the estate which can be disproportionate (For example: Sally, Bob & Bill buy a property of which Sally owns 40%, Bob owns 25% and Bill owns 35%). In this instance, each tenant's share can be conveyed, mortgaged or devised to a 3rd party. It does require all parties to sign to convey a part or share and to sell the property entirely. If one of the tenants dies, the tenant's proportionate share passes to his/her heirs by will or intestacy. The estate must be "cleared" through probate then. Each share of ownership will have it's own tax basis.

4. Joint Tenants with Right of Survivorship

Again, parties don't need to be married and there may be more than 2 owners. Each joint tenant holds an equal and undivided interest in the estate. Once joint tenant can partition the property by selling his or her joint interest. All joint tenants are required to sign off to convey or encumber the property. The estate passes to surviving joint tenants outside of probate without a court action to "clear" title. Finally the deceased tenant's share is entitled to a "stepped up" tax basis as of the date of death.

Remember - Arizona is a community property State. Which means that any property acquired by a husband and wife is presumed to be community property unless legally noted otherwise. Title can be held as "sold and separate" with the approval of the other spouse. 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.

All of these different way to take title has different legal & tax consequences so make sure you are consulting your advisers before taking title to fully understand the different options.

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