Property OwnershipIntermediateArizona Exam

Arizona allows married couples to hold title as 'community property with right of survivorship.' The primary advantage of this form of ownership is:

AIt allows either spouse to sell the property without the other's consent
BIt provides a full stepped-up tax basis and avoids probate upon the first spouse's deathCorrect
CIt limits each spouse's liability to their share of the property
DIt requires a partition action to separate interests

Why It provides a full stepped-up tax basis and avoids probate upon the first spouse's death Is Correct

Answer B: It provides a full stepped-up tax basis and avoids probate upon the first spouse's death

Community property with right of survivorship provides both a full stepped-up income tax basis on the entire property at the first spouse's death AND passes the property directly to the surviving spouse outside of probate.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

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