What Happens to Tenancy by the Entirety in a Florida Divorce

Divorce immediately destroys tenancy by the entirety. The moment a Florida court enters a final judgment of dissolution, every asset the couple held as tenants by the entirety converts to a tenancy in common by operation of law under Florida Statutes Section 689.15. Each former spouse receives an undivided fifty percent interest, and the creditor protection that shielded those assets throughout the marriage vanishes.

This automatic conversion creates a window of vulnerability that creditors actively monitor. A judgment creditor who could not touch a married couple’s home, bank accounts, or investment portfolios can immediately levy against the debtor ex-spouse’s fifty percent interest the day the divorce becomes final. For spouses who built their asset protection strategy around entireties ownership, understanding what divorce does to that strategy is essential for planning before, during, and after the dissolution.

How Section 689.15 Converts Entireties Property

Florida Statutes Section 689.15 provides that “in cases of estates by entirety, the tenants, upon dissolution of marriage, shall become tenants in common.” The Florida Supreme Court confirmed this automatic operation in Powell v. Metz, 55 So. 2d 915 (Fla. 1951), holding that the conversion occurs the instant the divorce decree becomes effective, not when the parties physically divide their assets or retitle their property.

This means there is no gap or grace period. A creditor with an existing judgment against one spouse can record that judgment against the newly created tenancy in common interest immediately upon dissolution. The creditor does not need to wait for the marital settlement agreement to be implemented or for deeds and account titles to be updated.

The conversion applies to every type of entireties property simultaneously. Real estate, bank accounts, brokerage accounts, vehicles, LLC membership interests, and any other asset held as tenants by the entirety all become tenancies in common at the same moment. A couple cannot selectively preserve entireties protection on some assets while divorcing.

Tenancy by the Entirety Property Is Presumed Marital

Florida’s equitable distribution statute, Section 61.075, creates a powerful presumption that property held as tenants by the entirety is marital property subject to division. This presumption applies regardless of when the property was acquired.

For real property, Section 61.075(6)(a)(2) provides that all real estate held by the parties as tenants by the entireties is presumed to be a marital asset whether acquired before or during the marriage. The same rule applies to personal property under Section 61.075(6)(a)(3). The Florida Supreme Court reinforced this presumption in Robertson v. Robertson, 593 So. 2d 491 (Fla. 1991), holding that even when one spouse can prove the property was purchased entirely with nonmarital funds, the act of titling it as tenants by the entirety creates a presumption of gift that must be overcome.

Overcoming that presumption requires clear and convincing evidence under Section 61.075(6)(a)(4). As a practical matter, the spouse claiming the property is nonmarital must show that no gift to the other spouse was intended when the property was placed in entireties ownership. The Fifth District Court of Appeal addressed this in Hill v. Hill, 675 So. 2d 168 (Fla. 5th DCA 1996), where the former husband successfully proved the conveyance was solely for survivorship purposes rather than as a gift.

The intersection of these two rules creates a trap for asset protection planning. Property placed into entireties ownership for creditor protection is simultaneously being classified as marital property for equitable distribution purposes. A spouse who converted separate assets into entireties form to shield them from creditors may find those same assets fully exposed to division in a divorce.

The Creditor Exposure Window

The most dangerous period for a debtor spouse occurs between the filing of a divorce petition and the implementation of the marital settlement agreement. During this interval, the protection is effectively dying. Creditors of one spouse know that entireties protection will soon end, and sophisticated creditors monitor dissolution proceedings specifically for this reason.

Once the final judgment is entered, the former debtor spouse’s fifty percent interest in every previously protected asset becomes immediately available to creditors. If the debtor spouse receives specific assets in the equitable distribution, those assets carry no residual entireties protection.

The exposure is not limited to the debtor spouse’s share. If the marital settlement agreement requires one spouse to transfer assets to the other, the transferring spouse’s creditors may be able to challenge those transfers under Florida’s fraudulent transfer statutes, Chapter 726. A transfer made pursuant to a divorce settlement can still be fraudulent if the transferring spouse was insolvent at the time and the transfer was made to avoid creditors rather than as a genuine arm’s-length exchange.

How Divorce Interacts With Other Creditor Claims

Different types of post-divorce financial obligations receive different treatment under Florida’s asset protection framework.

Equitable distribution awards are treated as ordinary money judgments. If a divorce court orders one spouse to pay the other a lump sum or installment payment as part of the property division, the receiving spouse is simply a judgment creditor. The paying spouse can use Florida’s standard exemptions to protect assets from collection of this obligation.

Child support and alimony operate under a different set of rules. Florida law gives support obligations priority over most exemptions. Section 222.11, which protects head-of-household wages from garnishment, contains an exception for court-ordered support. Homestead protection under Article X, Section 4 of the Florida Constitution cannot be waived by a debtor, but support obligations have historically received more aggressive collection treatment than ordinary judgments. The How to Protect Assets From Divorce page examines these distinctions in detail.

Joint debts present a different complication. If both spouses co-signed a loan during the marriage, the creditor can pursue either former spouse for the full amount after divorce, regardless of which spouse the marital settlement agreement assigns responsibility for the debt. The marital settlement agreement is a contract between the spouses; it does not bind the creditor, who was not a party to the agreement.

Planning Before Divorce: Preserving Asset Protection

Couples who anticipate divorce and depend on entireties protection should consider restructuring their asset protection before the dissolution is filed. Once the divorce petition is filed, the cut-off date for classifying marital assets has been established under Section 61.075(7), and any transfers made after that point face heightened scrutiny.

Several strategies may help preserve protection through and after a divorce, though each carries its own risks and limitations.

A debtor spouse who receives assets in the equitable distribution can retitle those assets into exempt forms recognized under Florida law. The homestead exemption under Article X, Section 4 of the Florida Constitution protects an unlimited value of the primary residence on up to half an acre within a municipality. Retirement accounts receive protection under Florida Statutes Section 222.21. Annuities and life insurance proceeds are protected under Section 222.14. These exemptions do not depend on marriage and remain available to a single person after divorce.

Transferring assets into a multi-member LLC before divorce can provide some post-divorce creditor protection through the charging order limitation under Florida Statutes Section 605.0503. After divorce, the former spouse who retains the LLC interest has a membership interest that creditors can only reach through a charging lien, not through forced liquidation or seizure of LLC assets. However, converting entireties assets to LLC ownership before divorce may trigger both fraudulent transfer concerns and equitable distribution complications.

If the debtor ex-spouse remarries, new assets acquired jointly with the new spouse can be titled as tenants by the entirety, restoring the protection for those assets going forward. This does not help with assets that were already exposed during the period between divorces.

The Marital Settlement Agreement as an Asset Protection Tool

The marital settlement agreement itself can be structured with creditor exposure in mind, though its primary purpose must remain the equitable division of assets between the spouses.

Allocating the majority of liquid assets to the non-debtor spouse, in exchange for the debtor spouse retaining exempt assets like the homestead and retirement accounts, can minimize the total exposure to creditors. This approach is legitimate when it reflects a genuine negotiation between the spouses, but a court may scrutinize an agreement that appears designed primarily to defraud creditors rather than to achieve fair distribution.

The timing of asset transfers under the settlement agreement matters as well. Assets that are promptly retitled into exempt forms after distribution receive better protection than assets that sit in non-exempt accounts while the debtor spouse delays implementation.

What Happens to Entireties Property in Specific Scenarios

Real estate transitions are the most visible consequence of divorce. A marital home held as tenants by the entirety becomes a tenancy in common upon dissolution. If one spouse is awarded the home, the other spouse must execute a quitclaim deed transferring their interest. Until that deed is recorded, both former spouses appear on the title as tenants in common, and a creditor of either spouse can record a judgment lien against the property.

Bank and brokerage accounts lose their entireties presumption the moment the marriage ends. Under Section 655.79, the presumption that a joint account between spouses is held as tenants by the entirety depends on the account holders being married. Once the marriage is dissolved, the accounts are simply joint accounts with no special creditor protection. The Which Banks Offer Tenancy by the Entirety Accounts article discusses how financial institutions handle the entireties designation.

LLC membership interests present additional complexity. If both spouses owned an LLC as tenants by the entirety under the framework described in the Owning a Professional LLC With a Non-Licensed Spouse article, the divorce converts that ownership to a tenancy in common. The LLC operating agreement should address what happens upon dissolution of the members’ marriage, including buyout provisions, management transition, and whether the charging order protection under Section 605.0503 applies differently to a co-owned LLC than to a multi-member LLC with unrelated members.

Second Marriages and Restored Protection

Remarriage creates an opportunity to re-establish entireties protection, but only for assets acquired or retitled after the new marriage. Assets that were exposed to creditors between marriages do not retroactively gain protection by being placed into entireties ownership with a new spouse.

Any transfer of assets into entireties ownership with a new spouse must satisfy the same requirements that apply to any entireties creation. The transfer must not constitute a fraudulent conveyance under Chapter 726, the transferring spouse must be solvent at the time of the transfer, and the transfer must satisfy the six unities required for valid entireties ownership. The Non-Debtor Spouse Liability for Fraudulent Transfers article discusses how courts evaluate transfers to entireties accounts when a creditor challenges them.

Why Tenancy by the Entirety Should Not Be the Only Strategy

The vulnerability of entireties ownership to divorce illustrates a broader principle: any asset protection strategy that depends entirely on marriage is inherently fragile. Marriage is a legal status that can change, and when it does, the protection disappears instantly.

Couples who face significant creditor exposure should consider layering additional protections alongside entireties ownership. Homestead protection does not depend on marriage. Retirement account exemptions survive divorce. Irrevocable trust structures, including domestic and offshore asset protection trusts, can provide protection that continues regardless of marital status. The Tenants by the Entirety page provides an overview of how entireties protection fits within a comprehensive asset protection plan.

The strongest asset protection plans do not depend on any single legal tool. They combine multiple strategies so that the failure of one layer does not leave the client completely exposed.