Tenancy by the entirety is a unique form of property ownership available only to married couples in certain states, including Florida. It offers several advantages not found in other forms of co-ownership and provides enhanced asset protection for spouses. In this comprehensive guide, we’ll explain what tenancy in its entirety is, how it works, its requirements, benefits, and more.
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What Exactly is Tenancy by the Entirety?
Tenancy by the entirety is a special type of joint tenancy that is only available to married couples. Under tenancy by the entirety, property is owned jointly by both spouses with each having an equal, undivided interest in the whole property. The key features of tenancy by the entirety are:
- Both spouses must be on the title.
- Each spouse has an identical interest in the property.
- Neither spouse can sell, encumber or otherwise transfer the property without the consent of the other.
- If one spouse dies, the surviving spouse automatically receives full ownership of the property.
In essence, tenancy by the entirety treats the married couple as a single legal entity when it comes to ownership rights. This unique bundle of rights provides protections and advantages not found in other forms of co-ownership.
How Tenancy by the Entirety Works in Florida
Florida is one of about 25 states allowing tenancy by the entirety ownership of real and personal property. Under a TBE, both spouses jointly own the asset with an undivided equal interest. The key characteristics of TBE in Florida include:
- Each spouse has a full 100% ownership interest in the property
- Neither spouse can sell, lien or transfer their interest without the other’s consent
- Asset is protected from individual spousal debts and creditors
- Right of survivorship – if one spouse dies, the other automatically gets full ownership
This differs from other joint tenancy arrangements like tenancy in common or joint tenancy with right of survivorship. Tenancy by the entirety is a special form of joint ownership created specifically for married couples under Florida law.
What types of assets can be owned as tenancy by the entire estate?
In Florida, TBE ownership applies to real property like a house or land and personal property such as vehicles, bank accounts, stocks, boats, jewelry, furniture and other valuables. However, most other states restrict TBE to only jointly-owned real estate.
Spouses who want asset protection benefits in Florida can title their home, condo or other real estate as tenants by the entirety. They can also open bank accounts, brokerage accounts or safety deposit boxes as TBE. Vehicles like cars, trucks, RVs and boats can be registered with the DMV showing TBE ownership.
Tenancy by the Entirety Ownership Rights in Florida
Tenancy by the entirety grants each spouse equal rights to use and control the property. Both must agree before the asset can be sold, transferred, mortgaged or encumbered.
Neither party can partition their individual interest in the asset either. The property is owned as a single legal entity protecting it from seizure or lien due to the debts of only one spouse.
However, joint marital debts can still be collected from an asset held as TBE. And the property can be lost in bankruptcy proceedings if both spouses file together. Creditors cannot pursue the property if only one spouse owes a debt or files for bankruptcy individually.
What Are the Advantages of Tenancy by the Entirety?
There are several notable benefits to owning property as tenants by the entirety:
- Asset protection – Creditors of one spouse cannot forcibly partition the property or sell the debtor spouse’s interest. The property is generally shielded from any claims arising from debts of only one spouse.
- Right of survivorship – As mentioned above, the surviving spouse automatically inherits full ownership if their partner dies. The property does not pass through probate and is not subject to the deceased spouse’s will.
- Shared ownership – Both spouses have equal rights to use and enjoy the property. All decisions require mutual consent.
- Continuity of ownership – If one spouse dies or if the couple divorces, ownership is unchanged. The property remains accessible to the surviving or remaining spouse.
- Protection from judgments – The property is safeguarded against claims resulting from the negligence or personal liability of one spouse.
- Ease of transfer – Since ownership automatically transfers to the survivor upon death, no probate is necessary. The property can quickly pass to the living spouse.
What are the disadvantages of tenancy by the entire estate?
There are also some disadvantages of joint tenancy by the entirety:
- Limited availability – Only about half of U.S. states allow tenancy by the entirety ownership. Even then, it may be limited to certain property types.
- Shared ownership – Both spouses must consent unanimously to any decision involving the property. One spouse cannot act independently.
- Limited creditor protection – While the property has protection from creditors of one spouse, joint creditors can still pursue claims.
- No severance – The tenancy cannot be unilaterally severed or partitioned by one spouse since each owns the whole property.
- Potential for disputes – disagreements may arise requiring court intervention if spouses cannot agree on matters relating to the property.
- No protection after death – While the survivor receives the property, it then loses creditor protections and may need to go through probate.
What Rights Does Each Spouse Have?
Under tenancy by the entirety, each spouse enjoys extensive rights regarding the property:
- The right to use the property.
- The right to access and occupy the property.
- The right to rent out the property and receive income.
- The right to sell or transfer the property only with the other spouse’s consent.
- The right to act to protect the property from damage or waste.
- The right of survivorship to become sole owner upon their partner’s death.
Critically, neither spouse acting alone can sell, lease, mortgage, or otherwise encumber the property without the other’s consent. All actions require mutual agreement.
How Does Tenancy by the Entirety Compare to Joint Tenancy?
Tenancy by the entirety is often compared to joint tenancy with right of survivorship since they share some key features, including:
- Right of survivorship – ownership passes to the survivor if one owner dies.
- Undivided interests – joint owners each possess the whole property.
- Required unities – the owners must have identical interests acquired at the same time.
However, there are some important differences:
- Marriage requirement – Only married couples can hold property as tenants by the entirety. Any joint owners can be joint tenants.
- Unilateral severance – Joint tenancies can be terminated unilaterally by one owner selling their interest. Tenancy by the entirety requires mutual consent.
- Creditor protection – Tenancy by the entirety generally provides greater protection from the creditors of one spouse.
- Whole interest ownership – Each spouse owns the entire property. Joint tenants own a fractional share.
Overall, tenancy by the entirety offers greater advantages for married couples than joint tenancy provides for other joint owners.
Which States Allow Tenancy by the Entirety Ownership?
Currently, about half of U.S. states permit some form of tenancy by the entirety, primarily for jointly owned real estate. States recognizing TBE include:
- New Jersey
- New York
- North Carolina
- Rhode Island
A few states, like Florida, extend TBE ownership to include personal property. In states like Hawaii, TBE is also available to registered domestic partners. However, most states confine the use to only real estate owned jointly by married spouses.
It is important to understand your state’s specific laws regarding tenancy by the entirety before attempting to take title to property using this special ownership structure.
How Can Tenancy by the Entirety Be Terminated?
There are a few ways tenancy by the entirety can be terminated:
- Divorce – Upon divorce, the former spouses become tenants in common. This severs the right of survivorship.
- Joint sale or transfer – Since mutual consent is required, the tenancy ends if both spouses agree to sell or give away the property.
- Death – The tenancy irrevocably terminates upon the death of one spouse, with full ownership transferring to the survivor.
- Encumbrance – Taking out a joint loan or mortgage ends the tenancy by the entirety because both spouses encumber the property.
- Dissolution by court – In rare cases, a court may divide the property for divorce proceedings or partition actions.
Unilateral action by one spouse cannot terminate the tenancy. Both must consent to ending the arrangement in the absence of death or divorce.
Consult an Attorney When Considering Tenancy by the Entirety
Tenancy by the entirety offers unique protections and benefits for married couples who own homes and other assets together in Florida. But TBE is not necessarily the optimal ownership choice in every situation.
The estate planning attorneys at Stivers Law in Coral Gables help Florida residents make informed decisions regarding tenancy by the entirety and other estate planning matters. We assist with implementing ownership structures, titling assets properly, aligning beneficiaries, and developing cohesive legacy plans tailored to each client’s needs and financial circumstances.