What Is Community Property With Right of Survivorship?

In Arizona, community property with right of survivorship is a way for married couples to hold title so that when one spouse dies, the property passes automatically to the survivor without probate, and the entire asset receives a stepped-up tax basis under federal law. It’s created by specific language in the deed or account registration, governed primarily by Arizona Revised Statutes § 33-431, and either spouse can end the survivorship feature on their own at any time.¹

What CPWRS Is and Who Can Use It

Arizona’s default rule when property is granted to two or more people is tenancy in common, meaning each owner holds a separate share that does not automatically pass to the others at death. Married couples are treated differently, but they still need express language on the deed to get survivorship rights.² Without that language, the property is simply community property, and when one spouse dies, their half typically goes through probate before anyone inherits.

CPWRS is available only to spouses. Any two co-owners can use joint tenancy with right of survivorship, but only a married couple can hold community property, and only a married couple can add the survivorship feature to it.

The Tax Benefit That Sets It Apart

This is the main reason Arizona couples choose CPWRS. Under Internal Revenue Code § 1014(b)(6), when one spouse dies, property that qualifies as community property receives a new cost basis equal to fair market value on both halves, not just the deceased spouse’s half.³ Joint tenancy, by contrast, only steps up the deceased owner’s half.

Consider a couple who bought a home for $200,000 that is worth $600,000 when one spouse dies. Under joint tenancy, the survivor’s basis becomes $400,000: their original $100,000 plus the $300,000 stepped-up half. Under CPWRS, the whole property resets to $600,000. Sell the home the next day, and the joint tenancy version leaves $200,000 in potential capital gains while the CPWRS version leaves essentially none.

Arizona has no state estate or inheritance tax, so unless a couple’s estate exceeds the federal exemption (currently over $13 million per person), the stepped-up basis is the tax benefit that actually matters.

Skipping Probate at the First Death

The survivorship feature means the asset transfers to the surviving spouse automatically by operation of law. There’s no probate case, no court supervision, and no need for a will to direct the transfer. For real estate, the survivor typically records a death certificate and an affidavit to clear title. For financial accounts, the institution transfers the account on proof of death.

The tradeoff is that survivorship overrides any will provision to the contrary. A spouse can’t leave their half of CPWRS property to a child, sibling, or anyone else through their will, because their interest disappears at death and the survivor takes the whole thing.

How to Title Property This Way

The deed or transfer document has to expressly declare that the property is held as “community property with right of survivorship.” General references to joint ownership or survivorship won’t do it; the statute requires those specific words.² A deed that reads only “as community property” creates community property without survivorship. A deed that reads “as joint tenants” creates joint tenancy instead, and you lose the double step-up.

Couples can take title as CPWRS when they buy, or they can transfer existing property to themselves under a new deed with the correct language. One spouse can also transfer solely owned property to both spouses as CPWRS.² For real property, the deed is recorded with the county recorder in the county where the property sits.

Real estate is the most common asset held this way, but Arizona couples also title bank accounts, brokerage accounts, and vehicles as community property with right of survivorship. For financial accounts, the institution’s account agreement usually controls how the survivorship feature is set up, so what appears on the account registration matters as much as what appears on a deed.

Selling or Mortgaging Requires Both Spouses

Neither spouse can sell or mortgage community property alone. A conveyance or encumbrance isn’t valid unless both spouses sign and acknowledge it.⁴ The survivorship feature doesn’t change that; CPWRS is still community property underneath.

The dual-consent rule protects each spouse from having the property sold or leveraged behind their back. It can also create a problem if one spouse becomes incapacitated and hasn’t signed a power of attorney. Couples relying on CPWRS should each have a durable power of attorney in place so property transactions can still happen if one of them can’t sign.

Ending the Survivorship Feature

Either spouse can terminate the survivorship right on their own by recording an “affidavit terminating right of survivorship” with the county recorder where the property is located. The affidavit has to be signed under oath and must state the spouse’s intent to terminate survivorship, identify the original deed by its recording date and document number, and include the legal description of the property.²

Here’s the part that surprises people. Terminating the survivorship right does not destroy either spouse’s community property interest.² After the affidavit records, both spouses still own the property as community property. What changes is only the automatic transfer at death. The deceased spouse’s half then passes through their will, or through Arizona’s intestacy rules if there is no will. A spouse who records the termination assuming they’ve freed up their half to leave to someone else is only half right; the property remains community-owned, so the disposition of that half still runs through community property rules.

Either spouse can file the affidavit without the other’s consent or knowledge. That’s the tradeoff for the simplicity of the arrangement. If CPWRS is a cornerstone of your estate plan, it’s worth checking periodically that the designation is still in place.

What Divorce, Separation, or a Spouse’s Killing Does

Divorce or annulment automatically ends the survivorship rights on any property held as CPWRS, converting the ownership to tenancy in common as of the date the divorce is final.⁵ Neither spouse has to file an affidavit; the severance happens by operation of law.

Legal separation is different. Arizona law specifically excludes a decree of separation that doesn’t end the marital relationship from the definition of “divorce or annulment” for this purpose.⁵ If you’re legally separated but still married, the survivorship feature stays in place unless one of you files the termination affidavit.

Arizona’s slayer statute produces a similar result if one spouse intentionally and feloniously kills the other. The killing severs the CPWRS and converts the ownership to tenancy in common, and the killer forfeits any intestate share, homestead allowance, and family allowance from the deceased spouse’s estate.⁶ The deceased spouse’s half then passes as if the killer had died first.

Creditors Can Still Reach It

CPWRS is not an asset protection tool. Because the property remains community property, both spouses’ interests can be exposed to debts either spouse takes on. A voluntary sale or mortgage requires both signatures, but a judgment creditor may still reach community property to satisfy a debt incurred by one spouse alone, and debts that benefit the community are typically enforceable against community assets.

The survivorship transfer at death doesn’t wipe out the deceased spouse’s creditors either. Creditors of the deceased spouse may still pursue claims against the property after the surviving spouse takes full ownership. Couples with significant debt exposure should think carefully about whether CPWRS makes sense for every asset, or only for the ones creditors are unlikely to reach.

Choosing Between CPWRS and Joint Tenancy

Joint tenancy with right of survivorship shares the probate-avoidance feature and is available to any co-owners, not just spouses. Each joint tenant holds an equal share, the surviving tenants take the deceased tenant’s share automatically, and a joint tenant can’t leave their share by will. Any joint tenant can also record an affidavit to terminate their own survivorship right, and the remaining joint tenants keep survivorship rights among themselves.²

For a married couple in Arizona, the choice usually comes down to taxes. Joint tenancy steps up only the deceased spouse’s half. CPWRS steps up the whole thing. Absent a specific reason to prefer joint tenancy, CPWRS is almost always the better titling choice for spouses holding appreciated real estate or investments.

1
Arizona Legislature. Arizona Code 33-431 – Grants and Devises to Two or More Persons; Estates in Common; Community Property with Right of Survivorship; Joint Tenants with Right of Survivorship
2
Arizona Legislature. Arizona Code 33-431 – Grants and Devises to Two or More Persons; Estates in Common; Community Property with Right of Survivorship
3
Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired from a Decedent
4
Arizona Legislature. Arizona Code 33-452 – Conveyance of Community Property
5
Arizona Legislature. Arizona Code 14-2804 – Termination of Marriage; Effect; Revocation of Probate and Nonprobate Transfers; Federal Law; Definitions
6
Arizona Legislature. Arizona Code 14-2803 – Murder of Decedent; Effect; Federal Law; Definitions