Property OwnershipIntermediateArizona Exam

In Arizona, 'community property with right of survivorship' differs from standard community property in that:

AUpon the death of one spouse, the property automatically passes to the surviving spouse without probate, combining the benefits of community property (full stepped-up basis) with right of survivorship
BIt shields the surviving spouse from all creditor claims of the deceased spouse, since the deceased's interest in community property with right of survivorship is extinguished at deathCorrect
CIt requires a special endorsement to the title insurance policy before any lender will recognize the ownership or accept the title as insurable for any subsequent transaction
DIt applies only to separately owned real property that spouses bring into the marriage, and does not apply to any assets acquired jointly during the marriage

Why It shields the surviving spouse from all creditor claims of the deceased spouse, since the deceased's interest in community property with right of survivorship is extinguished at death Is Correct

Answer B: It shields the surviving spouse from all creditor claims of the deceased spouse, since the deceased's interest in community property with right of survivorship is extinguished at death

Arizona recognizes community property with right of survivorship as a distinct form of ownership. It combines the tax advantage of community property (full stepped-up basis on all community property at death) with the probate-avoidance benefit of right of survivorship (automatic transfer to survivor).

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.

Key Property Ownership Terms in This Question

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Community Property

In community property states, most property acquired during marriage is owned equally by both spouses, regardless of who paid for it.

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