## Facts

- Fred N. Kirkes and Gail J. Kirkes were married; during the marriage, the marital community acquired an interest in an IRA titled in Fred’s name.
- Fred initially designated Gail as the sole beneficiary of the IRA.
- Fred later changed the beneficiary designation so that his son from a prior marriage, Joshua C. Kirkes, would receive 83% of the IRA at Fred’s death.
- After Fred died, Gail challenged the designation in probate, arguing Fred could not transfer more than his one-half community interest in the IRA to a nonspouse.
- The trial court granted summary judgment for Gail and awarded her 50% of the IRA.
- The court of appeals reversed, treated the IRA like a nonprobate transfer comparable to life insurance, and remanded for an equitable allocation of the community.
- The Arizona Supreme Court granted review to decide whether a spouse may leave more than one-half of a community-owned retirement account to a nonspouse beneficiary if the survivor receives at least one-half of the community’s total value.

## Issues

1. Whether Arizona community-property law permits a deceased spouse, by beneficiary designation, to direct more than one-half of a community-owned IRA to a nonspouse beneficiary.
2. Whether the surviving spouse’s protection is measured asset-by-asset (one-half of each community asset) or by ensuring at least one-half of the community’s total value overall.

## Decision

- The Arizona Supreme Court held that, absent unusual circumstances, a deceased spouse may leave more than one-half of a community-owned retirement account to a nonspouse beneficiary.
- The Court required that the surviving spouse ultimately receive at least one-half of the total value of the marital community.
- The Court affirmed the court of appeals’ reversal of the trial court’s ruling and remanded for proceedings to ensure an equitable overall division of community assets consistent with this rule.

## Legal Principles

- Each spouse holds an undivided one-half interest in community property.
- Either spouse generally may manage and dispose of community property during marriage, subject to duties owed to the other spouse.
- Arizona applies an overall-estate approach to nonprobate dispositions of community property at death: unequal disposition of a particular community asset may be permitted if the surviving spouse receives at least one-half of the community’s total value.
- Nonprobate beneficiary designations (including retirement accounts) may favor third parties, with the surviving spouse protected through adjustment of other community assets or equitable remedies rather than automatic invalidation of the designation.

## Conclusion

Arizona permits a decedent to direct more than one-half of a community-owned IRA to a nonspouse beneficiary through a beneficiary designation, so long as the surviving spouse receives at least one-half of the community’s aggregate value after an equitable allocation of all community assets and liabilities.


In re Estate of Kirkes, 295 P.3d 432 (Ariz. 2013)