Balancing Community Property Inside and Outside the Estate
Under community property laws, most property acquired during marriage belongs equally to both spouses. When one spouse dies, some assets may go through probate. Other community property passes outside probate through beneficiary names, joint titling, or trusts.
In making a division or distribution of community property held in the decedent's estate, the personal representative may consider community property held outside the estate so that the division of community property held in the estate and outside the estate is based on equal value but is not necessarily proportionate.
A.R.S. § 14-3916This gives the personal representative flexibility. Instead of splitting every asset down the middle, they can look at total value on both sides. They then adjust so each spouse's share comes out equal.
What This Looks Like in Practice
For example, say the surviving spouse already holds a $200,000 bank account outside the estate. The estate also has $200,000 in community real estate.
The personal representative can assign all the real estate to the estate's heirs. The surviving spouse keeps the bank account. The total value stays equal, but the split is cleaner.
Under Arizona law, property acquired during marriage is usually community property. However, some assets stay separate. Gifts, inheritances, and anything owned before the marriage are typically separate property.
This approach cuts the need to sell assets during probate. It also helps preserve property that might otherwise need to be split just for an even number. As a result, families save time and avoid extra costs.
Proper planning can set in advance which assets go through probate and which ones skip it. This lightens the personal representative's load and speeds up the process.