I Signed a Deed Disclaimer and my Spouse Died – Oh No!
What are we talking about here? In Arizona, any assets purchased during the marriage are presumed to be community property. One exception is when one spouse signs a disclaimer deed as part of a real estate transaction. This situation usually arises when the couple purchases a home, and one spouse has much better credit than the other spouse. It can also happen when one spouse is putting up all of the money from their own separate funds and want to keep it that way.
We recently received a question from a person concerned about a spousal disclaimer signed by a relative. This involved the effect of a disclaimer deed after death. The man had signed a spousal disclaimer so his wife could purchase a house under her name. He did this because the wife had good credit and he had poor credit. The home was purchased during their marriage. The wife recently died from a stroke and the concerned person asked if the man still has any rights to the house as a surviving spouse. There was no Will and they have two adult sons.
Probate is different than divorce.
• In a divorce the husband would probably not be entitled to the house because it is separate property unless he could prove other factors that might entitle him to some of the house such as the source of the funds or other financial considerations.
• Probate is Different.
o Where there is a will. If there was a Will, that would control what happened to the estate (and the house). The wife could leave the house to whomever she wanted, but the husband might be entitled to a certain percentage of her estate as you cannot totally disinherit your spouse.
o Where there is no Will, probate is guided by intestate rules. In short, the husband receives half of any community property and all of his spouses separate property. This true unless the wife had children from another relationship. In that case the husband gets half and the step children get the other half.
Is There a Solution? Yes. The best alternative is when the spouse's credit is repaired to ask the bank to add the spouse to the title and mortgage. In some cases, with appropriate counsel, a quit claim deed putting the spouse on the title may be appropriate. A review of the mortgage or deed of trust would be in order to do this properly.
Don't Forget about this. We see many instances where this is forgotten and only comes up when the spouse dies creating unnecessary legal issues about the effect of the disclaimer deed after death. We also see people use self-help with on-line forms only to create title nightmares. Don't be that couple.