Tenancy by the Entirety in Florida
In Florida, tenancy by the entirety is a form of joint ownership that protects property from creditors of either spouse. With tenants by entireties, both spouses own an undivided interest in 100% of the property. If either spouse dies, the surviving spouse inherits full ownership of tenants by entireties assets. In this way, tenants by entireties can be considered as joint tenancy with rights of survivorship plus marriage. Tenants by entireties is legal for all types of property in Florida.
Owning property as tenants by entireties is one of the simplest and most effective asset protection tools available for debtors in Florida. The requirements to create a tenancy by entireties in Florida include:
- joint ownership and control;
- identical interests in the property;
- the joint interests in the asset must have originated in the same instrument;
- the joint interests must have commenced simultaneously;
- the joint owners must have been married at the time they acquired the property; and
- the property must transfer to the surviving spouse after either spouse dies.
Understanding Tenants by the Entirety
Tenants by the entireties protection is not statutory, meaning that there is no Florida statute that makes entireties assets exempt from creditors. The Florida Constitution includes no protection for entireties assets.
Instead, tenants by entireties protection is the creation of Florida common law. Common law pertains to the precedent of court decisions over many years. The special protection of tenants by entireties has its basis in English common law, which created tenants by entireties to protect real property given as dower to a husband’s family. English common law, which included the concept tenants by entireties, was adopted by the Florida legislature in the 18th century.
Tenants by entireties protection since then has been consistently restated and adopted by Florida courts. Under common law, assets owned as tenants by the entireties are owned 100% by both spouses. That means neither spouse may transfer the asset without the consent and joinder of the other spouse.
Tenants by entireties law provides that if a debtor spouse cannot transfer the property voluntarily, then the same spouse cannot be compelled to transfer the property involuntarily. A creditor cannot force a debtor spouse to involuntarily assign tenants by entireties property because the debtor spouse has no right to transfer the property without the consent of the non-debtor spouse.
When both spouses are jointly indebted to a particular creditor, that joint creditor can involuntarily seize tenants by the entirety property. Separate judgments in favor of one creditor based on separate causes of action against each spouse do not constitute a joint judgment against both spouses. For that reason, an asset owned tenants by the entireties is protected by common law from the creditors of either individual spouse.
Tenants by entireties protection only applies when there is a civil judgment against only one spouse. A creditor with a single joint judgment against both spouses may execute the judgment against the tenants by entireties assets.
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Example Liability with Tenants by Entireties
Jack and Jill own a rental property located at 517 Main Street. Assume that Florida law considers the property owned by the entireties.
Jack owes $20,000 on his Visa card to Chase Bank. Jack and Jill jointly guaranteed a business loan of $20,000, issued by Bank of America. Jack and Jill cannot pay back either loan.
Both Chase Bank and Bank of America sue and get a money judgment. Chase’s judgment is against Jack alone, while Bank of America’s judgment is against both Jack and Jill.
Chase Bank’s judgment cannot attach to the rental property because it is owned as tenants by entireties. But Bank of America’s joint judgment will attach and become a lien on the rental property.
Other Forms of Joint Ownership
Tenants in Common
Tenants in common is the default form of joint ownership in Florida. With tenants in common, each owner owns a separate, partial interest in the property. The joint interests in tenants in common property is assumed to be equal.
For example, if real property is owned by two people as tenants in common, then each owner has a separate 50% ownership in the property. If either owner dies, their 50% interest passes to heirs specified in their individual will or living trust. The heirs would own 50% as tenants in common with the surviving owner. A creditor of the owner may levy upon their separate ownership share in tenants in common property.
Tenants in common provides no asset protection.
Joint Tenants with Rights of Survivorship
Joint tenants with rights of survivorship is the most common form of joint ownership. Any two people, whether or not they are married, can own property as joint tenants with rights of survivorship. Upon the death of a joint owner, the property automatically transfers to the surviving owner by operation of law. The asset does not pass to the deceased person’s heirs.
Any person can voluntarily transfer an interest in joint tenants with right of survivorship without the prior consent of the other joint owner. For that reason, a creditor can execute on a judgment against a debtor’s assets owned as joint tenants with rights of survivorship. Therefore, property owned as joint tenants with the right of survivorship is not protected from judgment creditors. A judgment creditor can use various creditor collection methods to levy or attack the value of the 50% interest of the debtor owner.
Example of Joint Tenants with Right of Survivorship
Jack and Jill own a bank account with their daughter Mary. The title on the account is “Jack, Jill, and Joe.” The parents put their daughter Mary’s name on the account in order to avoid probate after their deaths and to give Mary immediate access.
A creditor gets a civil judgment against Mary. This account is not a tenants by entireties account because the daughter, Mary, is a co-owner—only spouses may own accounts as tenants by the entireties.
Therefore, Mary’s judgment creditor can levy upon 1/3 of the money in the bank account.
How Does Something Become Tenants by the Entirety?
Generally, the best way for married couples to own property for asset protection is tenants by entireties. But not all jointly owned marital assets qualify as protected tenants by entireties assets. Assets that spouses think are owned by the entireties may actually instead be owned as joint tenants with right of survivorship or even tenants in common.
When entireties ownership of joint property is questioned, both spouses must have evidence that they intended to take title as tenants by entireties.
The Florida Supreme Court has said that any real or personal property owned jointly by a husband and wife is presumed to be owned as tenants by the entireties. However, there are several pitfalls to tenants by entireties ownership to avoid.
For example, suppose a person owns a bank account in their individual name, but then adds their spouse to the account shortly after marriage. This account does not qualify as tenants by entireties because the two spouses did not acquire their interests simultaneously.
Another common pitfall is where two people live together prior to marriage and buy a rental property as joint tenants with rights of survivorship. The couple marries and keeps the property in their joint names. Such property would not be tenants by entireties because the owners were not married at the time they purchased the land.
Tenancy by the Entireties Bank Accounts
In Florida, jointly owned bank accounts are presumed to be owned as tenants by entireties. In fact, a bank account is the most common tenants by entireties asset. Bank accounts were the subject of most lawsuits about tenants by entireties for many years. Many courts found ways to deny protection of joint marital accounts that the debtors believed were owned as tenants by entireties.
Supreme Court Decision
Then, in 2001, the Florida Supreme Court issued an opinion in Beal Bank, S.S.B. vs. Almand and Associates. The decision solidified tenants by entireties protection for bank accounts in Florida.
The Court established the presumption that jointly acquired personal property by a married couple in Florida is held as tenants by entireties. A creditor can rebut this presumption of entireties bank accounts by showing that the spouses intended to own the account property in some other manner of joint ownership. Specifically to bank accounts, the Court held:
As between the debtor and a third-party creditor (other than the financial institution into which the deposits have been made), if the signature card of the account does not expressly disclaim the tenancy by the entireties form of ownership, a presumption arises that a bank account titled in the names of both spouses is held as tenancy by the entireties as long as the account is established by husband and wife in accordance with the unities of possession, interest, title, and time and with right of survivorship.Beal Bank, SSB vs. Almand and Associates , 780 So. 2d 45 (Fla. 2001)
Subsequently, Florida adopted a law to codify the Beal Bank decision. Section 655.79 of Florida Statutes states that any bank account owned by husband and wife is presumed to be a tenants by entireties account unless there is clear and convincing evidence of their contrary intent:
(1) Unless otherwise expressly provided in a contract, agreement, or signature card executed in connection with the opening or maintenance of an account, including a certificate of deposit, a deposit account in the names of two or more persons shall be presumed to have been intended by such persons to provide that, upon the death of any one of them, all rights, title, interest, and claim in, to, and in respect of such deposit account, less all proper setoffs and charges in favor of the institution, vest in the surviving person or persons. Any deposit or account made in the name of two persons who are husband and wife shall be considered a tenancy by the entirety unless otherwise specified in writing.
(2) The presumption created in this section may be overcome only by proof of fraud or undue influence or clear and convincing proof of a contrary intent. In the absence of such proof, all rights, title, interest, and claims in, to, and in respect of such deposits and account and the additions thereto, and the obligation of the institution created thereby, less all proper setoffs and charges in favor of the institution against any one or more of such persons, upon the death of any such person, vest in the surviving person or persons, notwithstanding the absence of proof of any donative intent or delivery, possession, dominion, control, or acceptance on the part of any person and notwithstanding that the provisions hereof may constitute or cause a vesting or disposition of property or rights or interests therein, testamentary in nature, which, except for the provisions of this section, would or might otherwise be void or voidable.Section 655.79, Florida Statutes
The Supreme Court and the legislature have established strong legal support of tenants by entireties bank accounts. Nevertheless, opening a bank account as tenants by the entireties is still complicated. The Supreme Court of Florida described four alternative situations of bank account origination:
- An express designation on the signature card that the account is held as a tenancy by the entireties definitely establishes the account as held by the entireties. A creditor cannot present contrary extrinsic evidence is disallowed.
- If the account holders sign an express statement that tenancy by the entireties is not intended, along with an express designation of another form of legal ownership, then there is no presumption of a tenancy by the entireties. However, if the account holders show that the bank did not offer tenants by the entireties, then they can present other evidence that the accounts were intended to be owned by the entireties.
- If the signature card does not expressly disclaim tenancy by the entireties, there is a rebuttable presumption that a tenancy by the entireties exists.
- If the bank’s written account agreement states that joint marital accounts are not entireties accounts then a joint marital account may not be considered an exempt entireties account regardless of what is indicated on the signature card.
- If the financial institution offers the option of tenancy by the entireties ownership, and the account holder and spouse elect another form of joint ownership (such as joint tenants with right of survivorship), then there is no tenancy by the entirety or presumption.
Incorrectly filling out a bank account application or signature card, or not reading and understanding the account agreement, may prevent tenants by entireties ownership. Your inadvertent mistakes in opening a joint marital account may lead a court to deny tenants by entireties protection.
In practical terms, it may be helpful to have an attorney look over the titling and creation of joint accounts intended to be held as a tenancy by the entireties. Banks and bank officers are generally not responsible for opening an account as tenants by entireties unless you make the request in writing.
Example Tenants by Entireties Bank Account
Jack and Jill walk into a bank to open a new joint account. The signature card offers three ownership options: (1) “Tenants in Common,”, (2) “Joint Tenants,” and (3) “Tenants by Entiretes.”
They asked the bank officer for a joint account. The bank officer checks the box “Joint Tenants” and hands the form to Jack and Jill who sign the application form. This is not an entireties account. Jack and Jill were offered an entireties option but they instead selected a joint tenancy account.
Can You Own a Business as Tenancy by the Entireties?
Yes, a married couple can own a business as tenants by entireties. The same presumption for bank accounts applies to corporate stock certificates held by both spouses, even if the term “tenants by the entireties” is not on the actual certificate.
Corporate resolutions authorizing stock issuance can provide that the stock certificates will be issued as tenants by entireties. LLCs are more complicated. The company operating agreement should expressly provide for tenants by entireties ownership. Furthermore, the LLC operating agreement should ensure that the LLC interests actually operate as a tenancy by the entirety.
In other words, both spouses should have equal control over the LLC interests and equal economic and voting interests. Furthermore, upon the death of one spouse, the surviving spouse should automatically inherit all of the LLC interests held as tenants by entireties.
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Tenants by Entireties Treatment of Tax Refunds
Tax refunds can be tenancy by the entireties property. A bankruptcy court, In re Kossow, states that “a rebuttable presumption arises that all personal property, including a joint tax refund, is held as a tenancy by the entireties as long as the personalty is acquired by husband and wife in accordance with the unities of possession, interest, title, and time with right of survivorship.” Courts have reached similar conclusions in other cases as well.
Courts have also held that the presumption of a tenancy by the entireties ownership of a tax refund exists even if the refund is attributable to the activity of just one of the spouses (for example, if there is only one working spouse).
Can Cars Be Owned as Tenants by the Entireties?
Cars can be owned as tenants by entireties, but they must be titled correctly. Unlike most personal property, the presumption of a tenancy by the entirety does not exist with automobile ownership. Section 319.22(2)(a) of the Florida statutes provides that title to automobiles can be held by two people with the designation of either “and” or “or.” The designation of “and” allows tenancy by the entirety ownership, but the designation of “or” does not.
Unfortunately, the default joint designation when acquiring ownership of vehicles jointly tends to be “or.” When a married person requests a dealer or the DMV to issue a joint title, the person submitting the application most often will title the car as husband or wife. Florida residents who want to own cars as tenants by entireties should ensure that jointly acquired vehicles designate “and” in the title.
Some vehicles do not have titles, such as off-road vehicles, race cars, and certain equipment. Florida debtors can use other documentation, such as agreements, contracts, and bills of sale, to evidence tenancy by entireties ownership.
Consider Separate Ownership
It makes more sense for a married couple to own motor vehicles separately rather than as tenants by entireties. A car owner is liable for accidents involving the vehicle. If a family car owned as tenants by entireties causes damages, then both spouses are liable, and a resulting judgment would jeopardize all other tenancy by entireties assets.
Tenancy by entireties ownership makes more sense for collectible cars that are stored, or where the married couple has umbrella insurance covering potential accident liability.
Advantages and Disadvantages of Tenants by Entireties
In Florida, tenants by entireties ownership is a relatively quick and simple form of asset. There is little legal work or other expense in arranging property ownership by the entireties.
Tenancy by the entirety may not provide secure asset protection in some situations. First, a divorce between the spouses immediately converts the tenants by the entireties ownership into tenants in common. A debtor spouse’s share of previously tenants by entireties property would immediately be exposed to creditors.
Likewise, the death of one spouse terminates the tenancy by the entireties and vests the property solely in the surviving spouse. The asset would then be exposed to a surviving spouse’s judgment creditors.
Spouses anticipating divorce or facing serious illness of a non-debtor spouse can make alternative asset protection plans, using more advanced asset protection tools, any time prior to the termination of the tenancy by entireties.
Finally, sometimes tenants by the entireties ownership is inconsistent with a couple’s estate planning goals. This issue is common in second marriages where each spouse has their own children from prior marriages. Each spouse may want some of their assets to go to their own children rather than their surviving spouse if they are the first spouse to die. The survivorship aspect of tenants by entireties ownership supersedes any contrary bequest in either spouse’s estate planning document. There are advanced estate planning techniques that protect both the marital assets and the inheritance to the decedent’s children.
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Florida bankruptcy debtors cannot claim Florida’s statutory creditor exemptions of their assets until they have resided in Florida for two years. Technically, tenancy by entireties is not a property exemption because it is not excluded from execution by Florida statutes. Instead, tenancy by entireties is a form of property title and is protected by common law precedent.
Married bankruptcy debtors do not have to reside in Florida for two years before protecting tenancy by entireties assets in bankruptcy. Such assets are exempt only when one spouse files bankruptcy individually and when the couple has no joint unsecured debts.
Collection of judgments issued by a federal court generally is governed under state court rules and exemptions. Collection of federal civil judgments must recognize Florida asset exemption law.
However, different rules apply some situations where the creditor is the United States government or a federal agency. One example is a federal criminal prosecution where the U.S. government obtains an order against a defendant for forfeiture of the defendant’s assets obtained through a criminal enterprise. Criminal defendants are required to forfeit their interests in assets that would be otherwise exempt from collection in civil collection.
In one recent Florida case, the U.S. government obtained a judgment of criminal forfeiture against a man who pled guilty to money laundering. Prior to the prosecution, the man and his wife purchased a property jointly as tenants by entireties. Subsequently, the wife conveyed her interest to her separate revocable living trust as part of her separate estate planning. Properties owned by a debtor and non-debtor spouse are exempt from claims against the debtor spouse under Florida law.
The Court said that tenants by entireties ownership in Florida does not protect property from criminal forfeiture under federal statute 21 U.S.C. 853. Even if tenants by entireties ownership protected against forfeiture, the wife severed the entireties when she conveyed her property interest to an individual revocable trust. The U.S. District Court ordered the government to liquidate the property and allocate 50% of the net proceeds to the defendant’s spouse. IRS. tax collection law is similar to criminal forfeiture collection. An IRS tax lien applies to all taxpayer assets. Tenants by entireties and other Florida exemptions, including homestead, do not prevent the IRS from liquidating the taxpayer’s property interest.
Real Estate for Married Couples
Tenancy by the entirety is a type of joint ownership available to married couples. Both spouses must simultaneously acquire their interests in entireties property while married. Florida law presumes jointly owned marital property is intended to be owned by the entireties.
Real estate held by married couples is almost always held as tenants by the entireties. Whether jointly owned real property may be protected as tenants by entireties property depends upon the law of the state where the property is located, rather than the state where the debtor lives.
A Florida debtor may not claim tenancy by the entirety ownership in a state that does not recognize entireties ownership. Conversely, a resident of a foreign state can own real estate in Florida as tenancy by the entirety. Residency is not required to take advantage of tenancy by the entirety law in Florida.
What Happens to Tenancy by Entirety Property When Moving to Florida?
Often a debtor and spouse open a financial account in a foreign state that does not have tenants by entireties protection. Then, they move and establish residency in Florida. The debtor spouse claims that the account is protected because, as a joint account opened during the marriage, it qualifies as a tenants by entireties account.
At least two courts have previously addressed this question, and their decisions appear to reach different conclusions. One bankruptcy case said that the intent of married couples is the key issue. The couple could not have intended a tenancy by entireties asset when they lived in a state that did not permit such ownership.
Another bankruptcy court considering a jointly owned promissory note held that the location in Florida of a married couple changed the ownership of the note to tenants by entireties, especially since a note is a movable asset. It’s not clear whether the same court would consider a financial account to be movable for the same purpose.
The best answer may be that an asset does not change its character to tenancy by entireties when the owners move to Florida. Most courts will hold that legal ownership and characteristics of personal property are fixed upon acquisition under the laws of the state where the asset is acquired.
Tenancy by the Entirety States
Tenancy by entireties ownership is not recognized in every state. In fact, only about half of the states in the U.S. recognize tenants by entireties ownership, and fewer than half recognize an exemption from creditors.
Community property states are especially hostile to the entireties concept. Under community property laws, all property acquired or created during the marriage is considered the property of both spouses and is subject to judgments against either spouse.
Tenancy by the Entirety States for Real and Personal Property
States that offer tenants by entireties ownership for both real and personal property include:
- New Jersey
- Rhode Island
States with Tenants by Entireties for Real Estate Only
These states offer tenants by entireties ownership, but only for real estate:
- New York
- North Carolina
- North Dakota
States that Do Not Have Any Form of Tenancy by Entireties Ownership
Finally, the following states do not have any form of tenancy by entireties:
- New Hampshire
- New Mexico
- South Carolina
- South Dakota
- West Virginia
Important Court Cases About Tenants by Entireties
Beal Bank SSB v. Almand and Associates, 780 So. 2d. 45 (Fla. 2001): Presumption of Married Couple’s Tenants by Entireties Ownership
The Florida Supreme Court said that real and personal property owned jointly by a married couple is presumed to be owned as tenants by entireties unless the couple has expressly disclaimed entireties ownership. Tenants by entireties property is exempt from the creditors of either spouse but is not exempt from joint creditors.
In the case of joint marital financial accounts, if the account application provided a tenants by entireties ownership option, and the married owners chose another joint ownership option such as joint tenants with survivorship, the court presumes that the married owners rejected entireties ownership. If the application did not offer tenants by entireties, or if the financial institution does not offer tenants by entireties, the court presumes that the married owners intended entireties ownership unless there is contrary evidence.
This Florida Supreme Court case is one of the bedrocks of Florida asset protection planning for married couples.
In re Cauley, 374 B.R. 311 (Bankr. M.D. Fla. 2007): Florida Residency Not Required For Tenants by Entireties Exemption
The bankruptcy court held that a debtor does not have to be a Florida resident to claim exemption of property owned tenants by entireties with a spouse. Tenants by entireties is a form of property ownership that applies to all property located in Florida without regard to the domicile of the owners. Entireties property protections are common law traditions. Tenants by entireties is not different than an exemption given to Florida residents under Florida statutory law.
In re Davis, 403 B.R. 914 (Bankr. M.D. Fla. 2009): Separate Judgments Against Each Spouse Does Not Create Joint Debt
A creditor that has separate judgments against both spouses is not permitted to execute against exempt tenants by entireties property as if the debt was a joint debt.
FAQs about Tenancy by the Entirety in Florida
Below are some commonly asked questions about tenancy by the entireties in Florida.
Can you create a tenancy by the entirety by adding your spouse to title?
No, adding a spouse to an account or title of an asset owned before your marriage will not create tenants by the entireties ownership or protection. The legal elements of tenancy by the entirety ownership require that both spouses acquire their joint ownership interests in an entireties asset simultaneously during their marriage. Premarital accounts should be closed, and the married couple should open a new entireties account as part of an overall asset protection plan.
What happens to tenants by the entirety property after death?
After the death of a spouse owning property as tenants by the entirety, the property will immediately vest in the name of the surviving spouse. This vesting is no different than if the property was held as joint tenants with the right of survivorship. In fact, tenants by entireties is often described as “joint tenants with right of survivorship plus marriage.”
Can all property be owned as tenants by entireties?
Most states that protect from creditors tenants by entireties property afford the protection only to real property. In Florida, all types of property may be owned by a married couple as tenants by the entirety.
Florida residents who maintain property or accounts in states other than Florida are subject to exemption laws of the state where the property is located. Florida residents may assert entireties protection for property they jointly own in any entireties state. On the other hand, Florida’s tenants by the entireties protection is afforded to real property and tangible personal property located in Florida, even if owned by debtors who reside permanently outside Florida. A non-resident can protect real estate or financial accounts acquired in Florida and titled as tenants by entireties.
What is the difference between joint tenants and tenants by the entirety?
Marriage is the key difference between joint tenants and tenants by the entirety. Without marriage, you cannot own something as tenants by the entireties.
More importantly, property that is held as joint tenants or joint tenants with the right of survivorship is not protected from creditors of one of the spouses. Only tenants by entireties has that form of protection. You do not need to be married to own property as joint tenants, but you do need to be married to own property as tenants by entireties.
Can a homestead be owned as tenants by entireties?
Homesteads can be owned as tenants by entireties. Most married couples own their primary residence in their joint names. Jointly owned real property, especially homestead, is presumed to be owned tenants by the entireties, even if there is no such designation on the deed.
The property will be protected from all judgments as homestead, and it will be further protected from a judgment against either spouse individually as entireties property.
Can you protect your car or boat as tenants by entireties?
Yes, cars and boats can be owned as tenants by entireties. A car or boat should have a tenants by entireties designation in the title, or the title should read “husband AND wife.”
Be aware that an accident exposes both owners to liability, and a judgment would jeopardize all other entireties assets. The best advice is to own the vehicle or boat in an LLC or insure the vehicle and boat with an umbrella liability policy of at least one million dollars.
People also read about…
- Florida Asset Protection: a Guide to Planning, Exemptions, and Strategies
- Homestead Exemption Law
- Common Mistakes When Opening Tenants By Entireties Bank Accounts
- How to Open a Tenants by Entireties Account at a Florida Bank
- Does Joint Bank Account Become Tenants by Entireties Property When Family Moves To Florida?
About the Author
Jon Alper is an expert in asset protection planning for individuals and small businesses.
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