An Orlando Florida bankruptcy judge issued a decision in one of my client’s cases which included interesting holdings and valuable instructions on the issue of tenants by entireties bank accounts.My client and her future husband opened a joint bank account. They proceeded to marry. The money in the bank account on the date of their wedding was spent, and over the years it was replaced with new money acquired during their marriage up until the time the wife filed bankruptcy. The question was whether the money in the account was exempt as a tenants by entireties asset.
Tenants by entireties requires that the joint property in question is acquired under certain circumstances, one of which is that the property is acquired at the time the spouses were married. In this instance, the joint account was opened prior to the marriage, but the money in the account on the date of bankruptcy was acquired and put into the account after the marriage date.
The question was whether it’s the bank account or the money in the bank account that has to be acquired during marriage. I argued that so long as the money in the account was acquired during marriage it did not matter that the money was deposited in an account set up prior to marriage. The Court disagreed. The Court said that the debtor and her husband should have signed new signature cards after marriage to convert the account to an entireties account. Having failed to do so, all money deposited in the unprotected, non-entireties account became non-exempt upon deposit. In other words, the tainted account removed tenants by entireties protection from jointly acquired marital money.
If you and your spouse had already established joint financial accounts before you were married you should re-sign the signature cards after your marriage, or open new accounts after marriage, in order to have exempt tenants by entireties accounts.