Asset protection can be very complicated when a husband and wife reside apart in different states. Here is an interesting tenants by entireties issues presented recently by a new client.
Husband and wife lived in Ohio where they had joint bank accounts. The husband’s employer transferred his job to Florida. The wife has a job in Ohio. The husband moved to Florida, purchased a condo, and moved into the condo as his primary residence. He obtained a Florida drivers license and took other steps to establish Florida residency. The husband and wife opened a joint bank account in Florida.
The wife was sued in Ohio on her personal guarantee of a loan made to her Ohio business. They want to know if the money in the joint Florida account is exempt from the wife’s separate creditors.
Whether or not a bank account is a tenants by entireties account depends on the law of the state where the account is located rather than the law of the debtor’s residence. Florida law presumes that all bank accounts in Florida owned by a married couple are tenants by entireties accounts. The entireties status of bank accounts or other marital assets in Florida does not require that the debtor reside in Florida. (Contrast: assets exempted by statute require Florida residency).
Ohio law does not exempt a single debtor’s interest in an entireties bank account. The creditor could obtain a writ of garnishment from an Ohio court against the account. If the creditor served the writ on an Ohio branch of the bank (assuming the bank has a branch in Ohio) then the debtor would have to argue to an Ohio court that the account is sited in Florida and is exempt as an entireties asset. The argument’s success is uncertain before an Ohio judge.. If there are no Ohio bank branches the creditor would have to domesticate the judgment in Florida and serve the garnishment writ in Florida where the court in my opinion should exempt the account from the Florida judgment.
This couple should make sure their Florida bank account is with a bank that has no branches outside of Florida in order to provide the best change of an entireties exemption against the wife’s separate creditors.