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Joint Tenancy Property in an Arizona Probate

Posted on : August 4, 2016, By:  Christopher Hildebrand
Gift of Separate Property Through Joint Tenancy Deed

Joint Tenancy Property in an Arizona Probate

In Arizona, spouses have the right to hold property in joint tenancy with right of survivorship. The regular rules of joint tenancy still apply to joint tenancies with rights of survivorship. If one of the spouse transfers their interest to a third party though, it voids the joint tenancy all together.

What happens when spouses sign a contract to sell a joint tenancy property, but one spouse dies before the interest transfers? In Smith v. Tang, 464 P.2d 982 (1966) the Arizona Supreme Court addressed this question.

Facts of the Case

Mrs. Smith and Mr. Smith married in 1949. They signed an antenuptial agreement before the marriage. During the marriage, they bought a house, taking title in joint tenancy with rights of survivorship. In 1959, they entered into a contract to sell the property, but before the actual sale, Mr. Smith died. He left his property to his children from a prior marriage.

Mrs. Smith sued the executor (Tang) of her husband’s estate on several counts. These included moneys she paid for his funeral. She also sued to recover the amount of the house sales price and for a homestead allowance.

The jury found in Mrs. Smith’s favor and awarded an amount greater than the amount she had asked for.

The trial court granted a new trial. The court also denied her other requests. From these rulings, she appeals.

Consequences of Jury Award that Exceeds the Demand

Wife sought a total of about $16,000 from the estate. The jury was confused, reversed the counts and awarded about $1,900 more than that. The estate asked for a new trial and the court agreed. Its order did not specify the grounds.

Wife claims that the court should not have granted a new trial. The estate argues on appeal that it is appropriate for the trial court to order a new trial when the jury awards excess demanded damages.

The rule in Arizona is that when a jury awards more damages than requested, a court can modify the award. As long as the intent of the jury is clear, the trial court reforms the damage award to match the jury’s intent.

It is erroneous to order a new trial in this case however. Here, the Supreme Court found that the clear intention of the jury was to award Mrs. Smith everything she asked for.

The trial court should have modified the verdict by reducing it by $1,900 instead of granting a new trial.

The Joint Tenancy Property

Before Mr. Smith died, he and his wife sold the property that they held as joint tenants with the right of survivorship. However, when Mr. Smith died, the sale was still pending.

Mrs. Smith, as one of the joint tenancy owners, had an absolute right to one-half of the proceeds. She claimed that she also had the right to the rest given the way the couple held title.
Selling Jointly Owned Property With Rights of Survivorship
In a joint tenancy with right of survivorship, when one spouse dies, their share goes to the surviving spouse. The estate claimed that the contract of sale voided the joint tenancy.

The Supreme Court considered the four unities necessary for a joint tenancy. These are: (1) time (2) title (3) interest and (4) possession.

Although a contract of sale does not change the unities of time, title or possession, it does change interest. The interest held by the owners is merely title held as security for payment of the purchase price. The buyer holds beneficial title by equitable conversion.

Mr. Smith and Mrs. Smith did not show an intent to take the proceeds in joint tenancy. Mr. Smith put the down payment amount in his separate account. Therefore, the proceeds were not taken in joint tenancy and she has no rights in her husband’s share.

Validity of Antenuptial Agreement

Mrs. Smith argued that a portion of the antenuptial agreement waiving her rights to a probate homestead was void.

She claimed that only clearly stated language in an ante-nuptial agreement can waive a probate estate. The Court agreed with that proposition. It found, however, that the agreement clearly and explicitly described the rights. Therefore, wife waived the rights by signing the agreement.

Disposition

The Arizona Supreme Court reversed the new trial order. It remanded to the trial court with orders to issue a decision consistent with this opinion.


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