Question: My spouse and I are Arizona residents. I formed an Arizona LLC by filing Articles of Organization that state that I am the sole member. Even though I was married when I formed the LLC, my spouse is not listed in the Articles of Organization as a member of my LLC. How do I prove that I am the sole owner of the LLC and that my spouse does not own one half of the LLC as community property?
Answer: You must have your spouse sign a written document (I call it a Disclaimer of Membership Interest in an Arizona Limited Liability Company) in which the non-owner spouse acknowledges that the non-owner spouse does not have any ownership interest in the owner spouse’s membership interest in the LLC.
Arizona Revised Statutes Section 25-211.A states:
“All property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is:
1. Acquired by gift, devise or descent.
2. Acquired after service of a petition for dissolution of marriage, legal separation or annulment if the petition results in a decree of dissolution of marriage, legal separation or annulment.
The word “devise” means inheriting property through a will. The word “descent” means inheriting property from a relative who died without a will.
If you are a resident of Arizona who is married and you form an Arizona LLC or if you acquire a membership interest in an Arizona LLC while you are married your spouse will own a community property interest in the company with you EVEN IF HE/SHE IS NOT NAMED IN THE ARTICLES OF ORGANIZATION, AN OPERATING AGREEMENT OR ANY OTHER LLC DOCUMENT unless Section 25-211.A applies to make your ownership separate property. The legal consequence of owning as community property is that each spouse owns an undivided one half of the total amount of the membership interest. For example, if the spouse named in the Articles of Organization as a member owns 100% or 50% of the LLC, community property ownership means each spouse owns 50% and 25% respectively of the LLC. If you divorce, each spouse will be entitled to his/her one half membership interest or other property of equivalent value.
How to Create a Separate Property Ownership Interest in an Arizona LLC
If a married resident of Arizona wants to own his or her interest in an Arizona LLC as separate property rather jointly with the other spouse as community property, the owner spouse must obtain the signature of the non-owner spouse on a document in which the non-owner spouse disclaims any ownership of the membership interest in the LLC. If the non-owner spouse will not sign a disclaimer, the LLC will be owned equally by the two spouses as community property unless Section 25-211.A applies to make the LLC membership interest separate property.
Purchase Arizona LLC attorney Richard Keyt’s Disclaimer of Membership Interest in an Arizona Limited Liability Company
If you are a married Arizona resident and you want own your membership interest in an Arizona LLC as separate property, you need to purchase my Disclaimer of a Membership Interest in an Arizona Limited Liability Company form for $47. As soon as your credit card payment is approved, you will receive an email message with the disclaimer attached as an Abode pdf fillable form. Simply type the information into the blank spaces, print the document and present it to the non-owner spouse for signature.