Tenancy by the Entirety for Closely Held Stock in Florida

A married couple can own the stock of a closely held Florida corporation as tenants by the entireties, which puts the shares beyond a creditor who holds a judgment against one spouse alone. The ownership has to start that way. The corporation issues or transfers the shares to both spouses in a single instrument, and the corporation’s own records show that form of ownership.

Florida’s deposit-account statute reaches bank and credit union accounts, so it does nothing for corporate shares. Whether stock is entireties property turns on the six common-law unities and the presumption the Florida Supreme Court adopted in Beal Bank. A creditor attacking the shares must show that a unity was missing the day the couple acquired them.

Can Closely Held Stock Be Owned as Tenants by the Entirety in Florida?

Yes. Stock in a Florida corporation is personal property, and a married couple can own it as tenants by the entireties the same way they own a house or a joint bank account.

Under Cacciatore v. Fisherman’s Wharf Realty Limited Partnership, 821 So. 2d 1251 (Fla. 4th DCA 2002), a creditor who challenges jointly titled shares must prove that one of the required unities was absent when the certificate was acquired. That puts the record the corporation made at issuance at the center of the fight.

The certificate need not carry the words “with right of survivorship” for the presumption to arise. Survivorship is inherent in an entireties estate, and the court thought the extension to shares sounder still because transferring a jointly titled stock certificate takes more formality than spending a joint bank balance.

Shares held at a brokerage follow the broker’s account paperwork, which sets the ownership form and controls any later change, so entireties titling there is a matter of selecting the right option on the application. Shares in a company the couple controls work differently, because the couple decides what the corporate records say.

How a Corporation Records Entireties Ownership of Its Shares

A Florida corporation does not have to issue certificates at all, and a shareholder’s rights are the same either way. Ownership of uncertificated shares lives in the corporation’s own share records. An entireties designation has to appear there.

A certificate, where the corporation issues one, must state three things on its face:

• the corporation’s name and the fact that it is organized under Florida law
• the name of the person to whom the certificate is issued
• the number and class of shares

The name line is the entireties line. “John Smith and Mary Smith, a married couple, as tenants by the entireties” fixes the form of ownership in the document a creditor will ask to see. Section 607.0625 of the Florida Statutes sets those required contents and requires an officer designated in the bylaws or by the board to sign. A stock ledger does the same work for shares that a certificate ledger does for LLC membership interests.

Where a corporation never issued certificates, the assignment itself operates as the instruction to register the new owner. Delivery is complete once the corporation registers the couple as the record owners on its books, under chapter 678 of the Florida Statutes. A corporation whose share records were never updated leaves the couple with nothing to show when a creditor asks who owns the shares.

The shareholders and directors adopt a written consent that names the owners, states that they hold as tenants by the entireties, and authorizes the certificate. An assignment moves shares that are already outstanding. A Florida corporation can act by unanimous written consent instead of holding a meeting. Every consent needed to authorize a shareholder action must reach the corporation within 60 days of the date the earliest of them carries, and director action takes effect when the last director signs and delivers.

Titling Mistakes That Cost Entireties Protection in Stock

Shares one spouse owned before the marriage do not become entireties property when the couple marries, because the unity of marriage has to exist when the interest is acquired. An assignment the couple signs after the marriage, transferring the shares into both names as tenants by the entireties, creates the estate from the date it is executed.

Choosing another ownership form on the corporation’s paperwork gives up entireties protection only where entireties ownership was one of the choices offered. A joint-tenancy selection on a stock registration form that never listed entireties ownership is not a disclaimer. For stock, the conjunction between the two names is not decisive either, unlike a vehicle or vessel title, where a titling statute makes “or” control.

Where the certificates sit does not change what a Florida court can order. A judgment debtor who moved his corporate stock and LLC certificates to Canada was ordered to have them canceled and reissued, and the court reached them through him. A court acts on the corporate record. The ownership form written into that record protects the shares.

Sample Assignment of Stock

An assignment of stock transfers outstanding shares from their current owner to a new one. A married couple uses it to move shares into both names as tenants by the entireties.

The sample below has bracketed alternatives for both ways shares are held. The assignor of a certificated share endorses the certificate and delivers it, and the corporation cancels it and issues a new one. Uncertificated shares transfer on the assignment alone, which instructs the corporation to register the new owners on its books. The officer’s signature consents to the transfer and puts the corporation on notice of it.

Sample Corporate Resolution for Issuing Stock as Tenants by the Entireties

A corporate resolution issuing stock as tenants by the entireties is the corporation’s own record that both spouses’ interests began in the same act at the same time.

The sample consent below covers four situations: shares issued to the couple that were never certificated, shares whose old certificates cannot be found, separately held shares the spouses are combining into one entireties block, and new shares being issued now. It authorizes the certificate, designates the officers who sign share certificates, and directs the officers to record the issuance. Every shareholder and every director signs and dates it, and it is filed with the corporate minutes.

Sample Stock Certificate

A stock certificate is what a corporation issues to a shareholder as evidence of shares the corporation has already issued. Its face states that the shares are fully paid and nonassessable and that they change hands only on the corporation’s books, when the holder surrenders the certificate properly endorsed. The sample below is written for a married couple holding the shares as tenants by the entireties.

An assignment panel prints on the back of the certificate and stays blank at issuance. It is filled in only when the shares are later transferred, and every holder named on the face has to sign it, so both spouses sign where they hold as tenants by the entireties. The sample assumes a single class of common stock. A corporation authorized to issue more than one class or series must summarize the rights of each class on the certificate, or state conspicuously that a shareholder who asks gets a full statement without charge.

What Entireties Stock Does Not Protect Against

Entireties shares stop a creditor who holds a judgment against one spouse, and they stop nothing else. A debt both spouses owe reaches the shares, and a personal guarantee both spouses sign for the company’s bank loan creates exactly that debt.

Florida’s fraudulent transfer statute excludes entireties property from the definition of an asset, so far as a creditor of one spouse could not reach it. Shares a couple has held as tenants by the entireties since issuance are therefore not a transfer a creditor can unwind.

Pennsylvania’s definition of an asset is identical, and the Third Circuit applied it the same way in In re Blatstein, 192 F.3d 88 (3d Cir. 1999). A married couple owned all the stock of their two companies as tenants by the entireties from the day each was formed, so no transfer existed to set aside. That same decision refused to reverse pierce the two corporations. Moving separately owned shares into entireties form after a creditor appears is a different act, and a creditor who attacks that transfer has to prove its case.

A federal tax lien attaches to a spouse’s interest in entireties property, so the shares give the couple no protection from the IRS. Divorce ends the tenancy and leaves each former spouse a separate half a creditor can reach. At the first death the survivor holds the whole, exposed to the survivor’s own creditors.

Florida law lets a professional service corporation issue stock only to another professional entity or to individuals licensed in the same profession, so a physician’s or a lawyer’s professional corporation cannot put shares in an unlicensed spouse’s name. A corporation organized under the general corporation law carries no such restriction, and entireties planning for a non-licensed spouse runs through an entity outside the professional statutes.