There are many instances of people who incorrectly believed they had established exempt joint marital bank accounts and later found out that the accounts were not properly protected from creditors. Well-established Florida law exempts tenant by entireties accounts at financial institutions from the creditors of either spouse, but not from joint creditors. Some people make mistakes opening financial accounts because account applications do not explain the asset protection consequences of the account title options on the form.
Many account applications offer marital accounts titled as “joint with survivorship,” “multi-party account with rights of survivorship,” or “JTWROS.” Married couples opening a joint account may assume that any multi party account with rights of survivorship is the same as the tenants by entireties option. That’s true in most cases; Florida law presumes that all joint accounts owned by a married couple are intended the to be exempt tenants by entireties accounts. But, when the financial application also presents an option labeled “tenants by entireties” or “ten ent” or similar abbreviation, selection of any other type of joint ownership generates the presumption of a non-exempt account.
The customer has the duty to understand the legal meaning and consequences of account title options presented on a new account application.
I recently read one court decision which denied tenants by entireties exemption to a married debtor. In this case, the bank application form offered several options including, “multi-party account- tenants by entireties” and “multi-party account with right of survivorship.” The debtor did not appreciate the difference between the two account options and opened a right of survivorship account. The court held that the debtor has disclaimed entireties ownership.
The court said the bank’s obligation is provide customers with account choices but not to explain the choices or assist the customer in making the proper choice. Financial institutions including bank officers are not responsible to advise new customers on legal consequences of account title or asset protection. The court explained that Florida law imposes a duty on people to understand the legal meaning of contracts before signing.
The court noted that most Florida attorneys would not understand the difference between the creditor protection consequence of selecting a joint survivorship account instead of a tenants by entireties account. Nevertheless, the court concluded that legal complexity of account titles does not relieve joint depositors of the responsibility for making correct asset protection choices.