I just came from the bank. I was opening an account with my wife and we were confused. The form offered a choice of creating a joint tenancy with right of survivorship or a tenancy by the entireties. The bank person said we should create a tenancy by the entireties. But, I wanted to be sure that the survivor would own the account so we checked joint tenancy with right of survivorship. Did we do the right thing?
Joint tenancy with right of survivorship, hereinafter joint tenancy, is exactly what it sounds like. If one owner dies, the other owner owns the entire account or other asset. Tenancy by the entireties, hereinafter entireties, does not so clearly state the rights of the owners. Anyone can own an asset as a joint tenant with right of survivorship, but it also is survivorship. Tenancy by the entireties is limited to ownership by a married couple.
Unless the instrument creating ownership specifies the type of ownership, it is as tenants in common. Tenants in common means that if an owner dies, his or her ownership interest passes to the owner’s heirs and not automatically to the other owners. The exception in Florida is that when a husband and wife take ownership, it is generally presumed they take ownership as tenants by the entireties.
Creation of a joint tenancy with right of survivorship (hereafter referred to as “joint tenancy”) requires 4 unities. The 4 unities are: possession (each joint tenant is entitled to possession, joint ownership and control), interest (the percentage interest of each joint tenant must be identical), title (ownership of each joint tenant must have originated from the same instrument), and time (the ownership of each joint tenant must have arisen simultaneously). One of the biggest mistakes made by people avoiding legal advice is attempting to create a joint tenancy with other than equal ownership interests among all owners. That prevents a joint tenancy from being created and makes ownership as tenants in common.
Creation of a tenancy by the entireties also requires the 4 unities. Unlike joint tenancy, a tenancy by the entireties is generally presumed when ownership is taken as husband and wife. Use of the word “and” or the word “or” between the husband’s and wife’s name is not determinative as it is the actual intent of the parties that control. That is a fact question. One exception is, by statute, to create a tenancy by the entireties in an automobile title, the word “and” must join the spouses.
A husband and wife can own property as joint tenants with right of survivorship, if that is how they establish the account. At first blush, you might think that is the same as tenants by the entireties. But, there are important differences.
A joint tenancy can be severed by any joint tenant doing something that interferes with the 4 unities. That will generally mean an owner has transferred part or all of the owner’s interest in the property. In contrast, neither spouse can transfer his or her interest in entireties properties without consent of the other spouse except in divorce. By statute, a tenancy by the entireties is automatically converted to a tenancy in common when the owners divorce.
Since joint tenants and entireties both are survivor ownership, the important distinction is the inability of one spouse to sever a tenancy by the entireties. That means the creditors of only one spouse cannot attach or take that spouse’s interest in entireties property. Ownership in joint tenancy does not does not insulate the property from creditors of either joint tenant.
As you might expect, there are also exceptions to the general rules set forth above. A tenancy by the entireties can be created by direct conveyance from one spouse to both spouses, despite the unity of time requirement. And, super creditors, such as the IRS, can reach one spouse’s interest in entireties property.
All too often, people take title or open an account without fully understanding the importance of taking title correctly. A comprehensive approach to ownership issues is best completed through consultation with an experienced attorney. But, if you are not going to discuss these issues with your attorney, at least give this article careful consideration and understand the major differences between joint tenancy and entireties ownership.