Navigating Financial Account Applications To Create Tenants By Entireties Ownership

The general rule is that married accounts with rights of survivorship are presumed to owned by married couples as tenants by entireties unless the couple has disclaimed entireties ownership on the account application or elsewhere. The most common disclaimer of entireties protection occurs when a debtor selects the incorrect ownership on a financial institution’s account application. Not all bank provide a tenants by entireties option on an account application, but most securities firms do offer both a joint survivorship alternative and a separate entireties option.

The issue was part of my discussion with a new client this past month. The husband had been named as a defendant in a civil suit. He told me he had a joint account with his wife at Charles Schwab & Co. I had the client retrieve a copy of his account application. He saw that he and his wife had selected a joint survivorship account by checking the appropriate box. They did not check the box for a Tenants by the Entirety account. The account legally is not a protected entireties account.

Here is the first page of the Schwab Brokerage Account Application. Notice in Section 1 Schwab provides six alternate form of account ownership. Tenants by the Entirety is one of the six ownership options; joint tenants with survivorship (“JTWROS”) is a separate choice. By checking the box next to JRWROS the Schwab customer has made a choice not to own the account as tenants by the entirety. The general presumption of entireties ownership applicable to Florida joint survivorship accounts does not apply because the customer has affirmatively chosen ownership other than the entireties option. The Schwab customer checking JRWROS has disclaimed or rejected entireties ownership.

Schwab’s application does not allude to legal consequences in estate planning or asset protection that result from choosing any of the six alternatives. The form has only a footnote stating that some ownership forms (including entireties) is not available in all states. The application does not suggest that customers may want to get legal advice before making an account application. Understandably, Schwab wants to make opening account seem simple, and it does not want to have an application form with legal technicalities and warnings. The result is that many debtors are unwittingly putting joint assets at risk that could easily have been exempt in an entireties brokerage account.

About the Author

Jon Alper is an expert in asset protection planning for individuals and small businesses.

Book Consultation