One this week’s clients made a mistake when he opened a financial account. On the account application he checked the ownership title box labeled “jtwros” ( joint tenants with rights of survivorship) when two below there was another box labeled “tenants by the entireties”. Florida law presumes a jtwros account is a T by E account and that the property is exempt from the creditors of one spouse unless the married couple express the intent not to have T by E ownership. Courts have said that checking an ownership box as joint tenants when T by E was an available option is a disclaimer of entireties ownership an benefits.
My clients discovered this law before they consulted with me by reading about this topic on a prior blog post. So, before they met with me they had their bank retitle the account from jrwros to T by E. The problem is that one of the spouses is already being sued. I explained that a court may find that changing the account title to T by E at this time is a fraudulent conversion of a non-exempt asset to an exempt T by E asset.
Instead of changing the existing “defective” joint account I suggested they open a new account at a different financial institution and then move all the assets from the existing account to the new account. The new account should be titled joint tenants with survivorship. The new account should be at different firm that does not expressly offer T by E account and where the joint account with survivorship is the only joint marital account. This plan does not change title to the account and it does not transfer the assets to a third party. The plan merely changes financial institutions. People frequently change banks or brokerage firms for many legitimate financial reasons or personal preferences other than defrauding creditors.
I think the clients could defend a fraudulent conversion or transfer challenge if they move to a new financial firm and open an account with the same name.