Not all states allow married couples to hold property under the designation of tenancy by the entirety (“TBE property”). But in those states, like Florida, that do, owning real or personal property this way affords significant protection from creditors’ claims.
To qualify as TBE property, however, under Florida law, 6 unities must exist:
- unity of possession (joint ownership and control)
- unity of interest (identical interests in the property)
- unity of title (the interests must have originated in the same instrument)
- unity of time (the interests must have commenced simultaneously)
- survivorship, and
- unity of marriage (the property must be acquired during the marriage)
Because TBE property is held by both joint owners as a whole, and is not a divisible interest in the property, TBE property cannot be reached by creditors to satisfy a debt of one spouse only.
To be clear, TBE property does not mean that real or personal property can never be reached by creditors. It means that any creditor who has a claim against one spouse only as a debtor (and not both) cannot reach the TBE property. Any creditor who is indeed a creditor of both the husband and wife jointly, can reach TBE property.
In Florida, TBE property can be real property or personal property, like a bank account.
The extent of protection afforded by owning property as tenants by the entirety is important.
There are only 2 ways in which TBE status can be lost.
At the death of either spouse, property held as tenants by the entirety will immediately vest in the name of the surviving spouse. When this happens, the property status is no longer TBE property. Instead, it is no different than property owned as “joint tenants with the right of survivorship.”
This change in status is significant because it means that upon the death of one spouse, TBE property becomes vulnerable to the claims of creditors of the surviving spouse. If the surviving spouse was the sole debtor, because the property is no longer TBE property, it can be reached by his/her creditors.
Divorce is the other occurrence that will defeat the TBE property protections. When a couple divorces, TBE property converts to joint tenancy, and the divorced parties become tenants in common. This status change allows a creditor to now satisfy the debt from the property.
If you would like to know more about TBE property or any other form of property ownership related to estate planning, consult with an experienced estate and probate counsel.
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