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What is a Tenancy by the Entireties form of ownership?

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Most married persons own property as joint tenants with rights of survivorship. Upon the death of one spouse, ownership is vested by operation of law in the surviving spouse. Many married couples incorrectly believe that their jointly owned property is protected from their creditors if titled this way. However, joint ownership with rights of survivorship offers no asset protection. A creditor of either spouse may seize the interest the debtor spouse holds in joint tenant property.

Unlike joint ownership with rights of survivorship, “tenants by the entireties” ownership affords excellent asset protection benefits. Tenancy by the entireties is a special form of joint tenancy ownership which is available only to married persons. Some states have statutes that define and protect tenants by the entireties property. In Florida, tenants by the entireties protection has been established by judicial decisions interpreting common law. Under Florida judicial law, in order to qualify as tenants by entireties property, the property in question must have these six characteristics:

  • joint ownership and control (unity of possession);

  • identical interest in the property (unity of interest);

  • the interest must have originated in the same instrument (unity of title);

  • the interest must have commenced simultaneously (unity of time);

  • the parties must have been married at the time they acquired the property, (unity of marriage); and

  • the surviving spouse will own the property after either spouse dies (unity of survivorship).

Both spouses must acquire their ownership interest in an entireties asset at the same time during their marriage. Adding a spouse to an account or asset title one spouse had prior to marriage will not create tenants by the entireties ownership or protection.

When a married couple holds property as tenants by the entireties, each spouse is said to hold it “per tout,” meaning that each spouse holds the whole or the entirety, and not a share or divisible part. Thus, property held by husband and wife as tenants by the entireties belongs to neither spouse individually, but rather each spouse is in possession of the whole. When a married couple holds property as joint tenants with rights of survivorship, each spouse has his or her own separate share.

What does this mean to you?

It means that if property is held as a joint tenancy with rights of survivorship, a creditor of one of the joint tenants may attach the joint tenant’s portion of the property to recover that joint tenant’s individual debt. However, when property is held as a tenancy by the entireties, only the joint creditors of both spouses may attach the tenancy by the entireties property to recover the spouses’ joint debt; the property is not divisible on behalf of one spouse alone, and therefore, it cannot be reached to satisfy the obligation of only one spouse.

So, what assets can be held as Tenants by the Entireties?

Most states with entireties protection afford the protection only to real property. In Florida, unlike most other states, all types of assets- including all real property and personal property- tangible and intangible- may be held as tenants by the entireties. With respect to real property, a conveyance to spouses as “husband and wife” creates an estate by the entireties (in the absence of express language to the contrary) on its own and no further action is required. However, with respect to personal property, such as a bank account, the tenancy by the entireties form of ownership may not always be available and thus may require additional action.

The Florida Supreme Court has said that any real or personal property owned jointly by a husband and wife is presumed to be owned as tenants by the entireties. Additionally, Section 655.79 of the Florida Statutes says that any bank account owned by husband and wife is presumed to be a tenancy by entireties account unless there is clear and convincing evidence of their contrary intent. A creditor could rebut this presumption of entireties bank accounts by showing that the property ownership does not possess all six entireties characteristics or that the husband or wife indicated an intent to own the property in some other manner. Incorrectly filling out financial account applications is the most common error resulting in a legal disclaimer of entireties protection.

Do you have a real life example?

In Beal Bank v. Almand and Associates, 780 So.2d 45 (2001), the Bank obtained judgments against Amos F. Almand, Jr. and his son, Amos F. Almand, III based on obligations that arose in connection with the Almands’ businesses. The Bank, as a creditor, sought to garnish several bank accounts held by the Almands and their wives. It is undisputed that the Almands’ wives were neither parties to the judgments nor personally liable for their obligations.

Beal Bank v. Almand and Associates raises an important issue:

In an action by the creditor of one spouse seeking to garnish a joint bank account titled in the name of both spouses, if the unities required to establish ownership as a tenancy by the entireties exist, should a presumption arise that shifts the burden to the creditor to prove that the subject account was not held as tenancy by the entireties?

YES! The Court in Beal Bank held that as between the debtor and a third-party creditor (other than the financial institution into which the deposits have been made), if the signature card of the account holders does not expressly disclaim the tenancy by the entireties form of ownership, a presumption arises that a bank account titled in the names of both spouses is held as a tenancy by the entireties as long as the account is established by husband and wife in accordance with the unities of possession, interest, title, time and with right of survivorship.

Many financial institutions do not provide married couples with the opportunity to declare their intent to establish a tenancy by the entireties, and some financial institutions even affirmatively attempt to limit the ability of a married couple to establish a tenancy by the entireties account. Consumers have not been provided with informed choices on signature cards and account applications with regard to the various forms of legal ownership of property.

Our Recommendation:

  • Always select tenants by the entireties as the designated account ownership, if available, when completing new financial account applications.

  • If tenants by the entireties is not offered on your account application or signature card, write it in.

  • If you choose a different type of account ownership when tenants by the entireties is not offered it could serve as a legal disclaimer of entireties protection.

  • If your financial institution refuses to title your account as tenants by the entireties and only offers joint tenants with rights of survivorship, we recommend sending the financial institution a letter to be included in your account information that states your intent for the account to be held as a tenancy by the entireties AND a statement that all the other unities necessary for a tenancy by the entireties are established.