If you have recently moved to Arizona, having your will or trust reviewed by a local estate planning attorney is a good idea, regardless of the state from which you relocated.
However, an estate plan review takes on much greater importance if you came to Arizona from a state other than California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.
The reason: If you moved here from any of the 41 states not mentioned above, you should assume that your will, trust, ownership documents, etc., will not provide in Arizona the relative certainty that you enjoyed in your previous state.
(The property laws of the eight other “community property” states are similar to Arizona’s, and the estate planning impacts of your move to the Grand Canyon State may not be as severe.)
Community Property in Brief. In Arizona, assets acquired by a married couple – cash, investments, personal property, real estate, business interests, retirement accounts, etc. – or by either spouse during the marriage, are considered community property, with each spouse owning an undivided half interest in each asset. In most cases, it does not matter who purchased the asset, who generated the income used to purchase the asset, or in whose name the asset is titled.
There are exceptions. Examples of one spouse’s “sole and separate” property include assets acquired before marriage, a business started before marriage, a retirement or pension account that originated before marriage, or a gift or inheritance received at any time.
Even those exceptions are not absolute. For example, if the value of one spouse’s separate asset – e.g., a business or a pension account – increases during the marriage, the amount of the increase may be considered community property. Also, if separate-property cash becomes commingled by placing it in a joint bank account, it too will likely be treated as community property.
Quasi-Community Property. If those provisions seem confusing, the confusion can reach new heights when a married couple moves to Arizona from a non-community property state. That is when an estate plan review becomes especially important.
Under Arizona law, assets acquired by a married couple, or by either spouse, while they lived in a non-community property state are generally considered not as community property but as “quasi-community” property.
If, after moving to Arizona, one spouse dies or the couple divorces, how the courts treat the couple’s quasi-community property is unpredictable and very fact-specific. As a consequence, if the spouses’ estate plans do not expressly address the ownership of the assets that they owned when they moved to Arizona, the courts’ orders regarding the disposition of those assets could easily conflict with the wishes of either or both spouses.
To help ensure that your intentions are honored regarding the ownership of your pre-move assets and any assets you acquired after moving here, you would be wise to schedule a review of your will, trust and ownership documents by an experienced
Arizona estate planning attorney.
