Community Property With Right of Survivorship (AZ)

Property & Real Estate

A property title for married couples that passes automatically to the surviving spouse at death, with community property tax benefits.

Community property with right of survivorship (CPWROS) is for married couples in Arizona. It lets you title property so it passes to the survivor at death. No probate. No court involvement. The transfer happens by operation of law.

How CPWROS Works

When one spouse dies, the surviving spouse becomes the sole owner right away. All you need is a death certificate and an affidavit filed with the county recorder. The property stays out of probate court entirely.

The Key Tax Benefit: Double Step-Up in Basis

This is the big advantage over joint tenancy with right of survivorship. Because CPWROS property is community property, the IRS treats both halves as receiving a stepped-up basis at the first death. That means:

The entire property resets to current fair market value
Years of capital gains can be eliminated
The surviving spouse can sell with little or no capital gains tax

With joint tenancy, only the deceased spouse's half gets a step-up. CPWROS gives you the full benefit.

Limitations to Know

Only available to married couples in community property states like Arizona
Does not protect assets from creditors
Offers no control over what happens after the surviving spouse inherits
Cannot include conditions or restrictions on property use
If the surviving spouse remarries, the property could pass to a new spouse's family

CPWROS vs. a Living Trust

CPWROS handles the transfer at the first spouse's death cleanly. But it does not help at the second death. A revocable living trust avoids probate at both deaths. It gives you control over how assets go to children or other beneficiaries. Many families use CPWROS for real estate while also having a living trust.