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How to take title to a vacation property in Arizona
Once you have decided to take the plunge and purchase a “winter home” in the Grand Canyon State, you will have multiple decisions to make. One of the first, which will come at the closing of your purchase of that piece of real property, is how to take title in the property.
If you are married, and both you and your spouse own the property together, most likely your Iowa home is titled in your names as “Joint Tenants with Rights of Survivorship.” What this means is that both spouses own equal shares of the property and upon the death of one spouse, title will vest solely in the surviving spouse, by operation of law, and without the need to probate that piece of property. In addition, the surviving spouse will receive a step-up in basis of the deceased spouse’s ½ interest in the property.
The alternative is that the property is titled as “Tenants in Common.” This means that you own separate shares (equal or unequal) of the real property, and upon the death of one of the owners, the deceased person’s share of the property becomes a part of their estate and must be probated to transfer the interest. The person receiving the share of the property will receive a step-up in basis for that deceased person’s share.
In Arizona, a third alternative for holding title is available to spouses: Community Property with Rights of Survivorship (spouses can take title as only Community Property, and not have rights of survivorship, but it is generally not recommended, except in certain circumstances). This type of ownership is only available to a married couple, and in order to have the rights of survivorship, the words must be clearly stated in the vesting deed to the real property. The benefits to holding title to property as Community Property with Rights of Survivorship are numerous.
Once benefit is the right of survivorship. Similarly to Joint Tenancy with Rights of Survivorship, upon the death of one spouse, the deceased spouses ½ interest in the property will pass immediately upon that spouse’s death to the surviving spouse, by operation of law, and without the need to probate the estate. A second benefit is that upon the death of the first spouse, the surviving spouse receives a full step-up in basis of the entire property.
If you are considering purchasing a vacation or winter home in Arizona, and have questions about how to take title, or any other issue, please feel free to contact us to discuss those issues.
Attorney Jeff Baxter is licensed to practice in Iowa and Arizona.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
Source: http://www.dickinsonlaw.com/2016/01/title-vacation-property-arizona/
