What is Tenancy by the Entirety in Florida?
In Florida, tenancy by the entirety is a form of property ownership defined as jointly owned marital property with rights of survivorship. Survivorship rights means that when either of the co-owner dies, the legal title to the joint property automatically passes to the surviving owner.
Most jointly owned property includes survivorship rights, and it is referred to as “joint tenants with rights of survivorship” or JTWROS. However, only married people can own property as tenants by entireties; one cannot own entireties property with any family member other than a spouse.
Courts have literally described tenants by entireties as merely “JTWROS plus marriage.” Tenants by entireties ownership is sometimes abbreviated as “TE”, “Ten Ent”, or “T by E.”
Benefits of Tenants by the Entirety
Tenants by entireties ownership provides an asset protection benefit to married debtors. Florida law provides that any property owned by the spouses as tenants by the entireties is protected from a judgment creditor of either of the individual spouses. Tenants by the entireties protection exists to the extent a creditor has a claim against only one of the spousal owners.
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 does not constitute a joint judgment against both spouses.
How Does Something Become Tenants by the Entirety?
In Florida, tenants by the entireties protection has been established by judicial decisions interpreting common law. Under Florida judicial law, in order to qualify as a tenancy by the entirety, property in question must have the following characteristics:
- joint ownership and control,
- the spouse must have identical interest in the property,
- the spouse’s interests in the asset must have originated in the same instrument,
- the spouse’s interests must have commenced simultaneously,
- the joint owners must have been married at the time they acquired the property, and
- the surviving spouse will own the property after either spouse dies.
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. Additionally, 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. A creditor could 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. Incorrectly filling out a bank account application or signature card may prevent entireties ownership. If your financial account application indicates an alternative form of ownership a court may find that you and your spouse did not want a TBE account.
The legal elements of entireties ownership require that both spouses must acquire their joint ownership interests in an entireties asset at the same time during their marriage. Adding a spouse to an account or title of an asset owned prior to your marriage will not create tenants by the entireties ownership or protection. Premarital accounts should be closed, and the married couple should open a new entireties account.
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.”
Most states that protect from creditors tenants by entireties property afford the protection only to real property. In Florida, unlike most other states, all types of property—including all real property, tangible personal property, and intangible personal 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.
Only about half of the states in the U.S. recognize tenants by entireties. The following states recognize tenants by entireties for both real property and personal property:
These other states only recongize tenants by entireties for real estate:
Tenants by entireties is sometimes referred to as joint tenants with right of survivorship . . . plus marriage. Marriage is the key element of tenants by entireties ownership. Without marriage, you cannot own something as tenants by the entireties.
More importantly, property that is held as joint tenants or joint tenants with 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.
Tenants by entireties is a legal term referring to certain kinds of jointly owned property by married spouses. For jointly owned property to be classified as tenants by the entireties, it must be acquired at the same time, in the same document, with the same percentages, during the marriage.
Advantages and Disadvantages of Entireties
In Florida, tenants by entireties ownership is relatively quick and simple effective asset protection against individual judgments against either spouse. There is little legal work or expense in arranging property ownership by the entireties.
Tenancy by the entirety, however, may not provide secure asset protection for some people over the long term. First, a divorce between the spouses immediately converts the tenants by the entireties ownership into a joint tenancy as tenants in common between the former spouses. After divorce, the debtor’s share of the property would immediately be exposed to creditors. Likewise, a death of one spouse terminates tenants by the entireties and vests the property solely in the surviving spouse. The entire asset would be exposed to a surviving spouse’s judgment creditors. Sometimes tenants by the entireties ownership creates issues for estate planning when spouses want different estate plans.
Tenants by the Entirety in Bankruptcy
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. Therefore, the two-year bankruptcy waiting rule for Florida exemptions does not apply to assets the debtor owns jointly with a non-filing spouse as tenancy by the entirety.
Married bankruptcy debtors do not have to reside in Florida for two years or before they can protect entireties assets in bankruptcy. Entireties assets are exempt only when one spouse files bankruptcy individually, and when the couple has no joint unsecured debts.
Tenants By Entireties Does Not Stop Criminal Forfeiture
Collection of judgments issued by a federal court generally are collected under state court rules and exemptions. Collection of federal civil judgments must recognize Florida asset exemption law. However, different rules apply in special situations where the creditor is the United States government or a federal agency. One example is during 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 plead 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 a property from criminal forfeiture pursuant to federal statute 18 U.S.C. 853. Even if tenants by entireties ownership protected against forfeiture the wife severed the entireties when she conveyed herd property interest to an individual revocable trust; reasonable estate planning often interferes with asset protection. 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. Tenants by entireties and other Florida exemptions, including homestead, do not prevent the IRS from liquidating the taxpayer’s property interest.
Florida Real Estate Law for Married Couples
Under Florida law, real estate held by married couples is almost always held as tenants by the entireties. This form of ownership has the following important features:
- 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 owed by the entireties.
- Entireties property is protected from judgment creditors of either spouse but not from joint judgments.
- Real property and tangible property may be owned as tenants by entireties.
- Tenants by entireties asset protection is lost after divorce or death of one spouse.
- Entireties protection depends upon the laws of the state where property is located rather than state of debtor’s primary residence.
- Tenants by entireties has advantages in bankruptcy exemption planning.
Does Moving to Florida Change Joint Property to Tenants by Entireties?
In Florida, a joint account owned by married people is presumed to be held as tenants by entireties and is immune from collection of a judgement against either spouse individually. But some states do not recognize or exempt tenants by entireties assets. So what happens when an account is opened when a married couple lives in another state that does not recognize tenants by entireties and then the couple moves to Florida?
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 the married couples is the key issue. The couple could not have intended an entireties asset when they lived in a state that did not permit tenants by entireties 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.
We think that the best answer is that an asset does not change its character to entireties when the owners move to Florida. Courts might find that legal ownership and characteristics of personal property are fixed upon acquisition under the laws of the state where the asset is acquired.
What to Do Next
We help people go through their assets and income and determine what is at risk of collection from a judgment creditor. We then develop a plan to protect any exposed assets from collection. If you’re interested in protecting your assets from monetary judgment creditors, contact us or schedule an appointment online.