The general rule is that property owned by a husband and wife as joint tenants with rights of survivorship is presumed to be a tenancy by the entireties (“TE”) which is protected from the individual debts of either spouse. I received an email question about a property owned by a husband, wife, and their child as joint tenants with rights of survivorship. The writer wanted to know if the property would be protected from one spouse’s creditor.
There is no tenancy by entireties ownership when a non-spouse is on title with survivorship rights. Tenancy by entireties is limited to property owned by married couples who meet certain ownership requirements. Therefore, a creditor could levy upon the debtor’s spouse’s interest. As there are three equal owners, the debtor’s interest is 1/3 of the property equity.
This family could have titled their property in a way which could have retained entireties protection. The parents could have owned their share as tenants by entireties and made their daughter a tenant in common for 1/3 or any other percentage of equity. The parents’ two-thirds interest in the property would be owned as TE property. The parents’ estate plan could have left their interest to the daughter upon their deaths, and the daughter could have bequeathed here interest to the parents, thereby accomplishing the same result as three-way survivorship but protecting the interest of the debtor parent.