Florida's Asset Protection for Married Couples: Tenancy by the Entirety

Not only does the Sunshine State have white sandy beaches and warm weather year-round, it also has one of the best basic asset protection devices available for married people. For us lucky Floridians, we get to enjoy special forms of joint tenancy. Not everyone can take advantage of the benefits of tenancy by the entireties (TBE) in Florida, but for those who qualify it is a great way to protect their tangible and intangible assets. You might even have it already . . .

What is it?

Owning property, whether real estate (real property) or things (tangible or personal property) has many advantages. Mainly, the thing is yours. Home ownership is still a significant part of the American dream because it can exemplify one’s independence and financial achievement. Property ownership has two aspects, 1) how it is transferred, and 2) how it is protected from creditors. There are three primary ways that multiple people can own a single property in Florida: joint tenancy (with right of survivorship); tenancy in common; and tenants by the entireties.

In Florida, two people can own a property such as a single-family house or a vacation condo even if they aren’t married or related in any way. This form of ownership where more than one person owns an interest in the Florida property is called “joint tenancy”. When you add the words “right of survivorship” to a joint tenancy, this will immediately give the full title of the property to the co-tenant that is still alive when the other co-tenant passes away. Creditors are able to attach, or lien, one owner’s interest in the property, but are not usually able to force a sale.

The second form is “tenancy in common”. Each co-tenant owns a separate fractional share of the property which is generally determined by the amount that they contributed towards the purchase. With TIC, there is no right of survivorship meaning that when a co-owner dies, their interest transfers to their heirs or how their wishes are stated in their will. Also, a creditor can attach the joint owner’s interest and potentially force a sale.

The last form is “tenancy by the entirety”. TBE is a special type of tenancy that extends greater creditor protection. First, the property is not owned by Spouse A or Spouse B it is owned by Spouse A & Spouse B as a whole. This is important because property held in TBE can only be attached by creditors of both spouses to recover the spouses’ joint debt. The asset cannot be reached to satisfy the obligation of only one spouse. This form of ownership is the one we will be talking about today as it is a simple way for married couples to protect their assets.

Can I use it?

So, who exactly can take advantage of this? Florida law requires six unities (characteristics) of title must exist to qualify as tenants by entireties:

  • Joint ownership & 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 that they acquired the property, (unity of marriage)
  • The surviving spouse will own the property after either spouse dies (unity of survivorship)

It is important to note that both spouses must acquire ownership interest in an entireties asset at the same time during their marriage. In other words, you cannot have had a previous bank account, home or asset and then add your spouse to the title. [Note: there are ways to convert the properties to TBE].                                                                                                                                                                                                                                                          

Types of assets

Most states with entireties protection only apply it to real property. In Florida, all types of assets including all tangible and intangible may be held as tenants by the entireties. This means that you could have this protection on your bank accounts, retirement accounts, your vacation home and many more assets.

What’s the catch?

While TBE seems like a magical form of asset protection, it can come with some difficulties and limitations. It also may not be the best choice for your situation. When considering what the best form of tenancy would be for your situation, take a look at the following considerations before making a decision. As always, we recommend that you seek the advice of a trusted lawyer to guide you in making the best decision for your current situation.

  • Miscommunication: Some banks aren’t aware that you can own an account as TBE. It might be a hassle to deal with if your banker is not educated on the subject as you may have to jump through some hoops to get your accounts titled as TBE.
  • Paperwork Errors: Once you finally get your accounts retitled, there may be some errors. It is important that you and your spouse clearly state your desire to title your assets as “tenancy by the entireties”. When filling out paperwork, be very detailed and carefully scan all questions. If you accidentally check the box for survivorship on a financial account application, you have opted for “joint tenancy with rights of survivorship” over “tenancy by the entireties”.
  • Joint Debtors: If both you and your spouse have a debt or loan together then this protection no longer exists against your mutual creditor.
  • Death of a Spouse: These protections don’t survive death. If your spouse passes, your assets will no longer be in TBE.
  • Statutory Limitation: Remember that this form of ownership protection is ONLY available to married couples that obtained a property together while they were married.

Learning and understanding about your options for asset protection is the first step to becoming a hero to your family. Take the next important step and give us a call to discuss your options. Remember that it is better to have a plan, than no plan at all . . . the state will always have one for you.

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