Avoiding Probate With Tenancy by the Entirety Ownership

Many couples avoid probate of their valuable property by holding it as "tenants by the entirety."

By , J.D.

Many couples choose to hold title to their valuable property as "tenants by the entirety." Tenancy by the entirety is very much like joint tenancy, but it's just for married couples (and in a few states, domestic partners who have registered with the state). When it comes to avoiding probate, tenancy by the entirety has almost the same advantages and disadvantages of joint tenancy.

States With Tenancy by the Entirety Ownership

Ownership as tenants by the entirety is available only in some states. If you live in one of these states, tenancy by the entirety (also called "tenancy by the entireties") may be available to you:

Alaska*
Arkansas
Delaware
District of Columbia
Florida
Hawaii
Illinois**
Indiana*
Kentucky*
Maryland
Massachusetts
Michigan
Mississippi
Missouri
New Jersey
New York*
North Carolina*
Ohio‡
Oklahoma
Oregon*
Pennsylvania
Rhode Island*
Tennessee
Vermont
Virginia
Wyoming

* For real estate only
** For homestead property only
‡ Only if created before April 4, 1985

In some states, if married spouses take title to property together, they are presumed to own it as tenants by the entirety.

How Tenancy by the Entirety Works

Below are some advantages and disadvantages of owning property with your spouse or domestic partner as tenants by the entirety.

Pros

Cons

  • It's easy to create.
  • It's easy to transfer title to the spouse.
  • Tenancy by the entirety property is usually subject only to claims for debts that are the joint responsibility of both spouses.
  • Probate is avoided only when the first spouse dies. The survivor must use another method.
  • Probate is not avoided if the spouses die simultaneously (a very unlikely event).
  • Each spouse must own a half-share.
  • Not available in all states.
  • In some states, limited to real estate.

Tenancy by the Entirety vs. Joint Tenancy

There are a few important differences between joint tenancy and tenancy by the entirety. For one, if property is held in tenancy by the entirety, neither spouse can ever transfer his or her half of the property alone, either while alive or by will or trust. In the eyes of the law, the couple owns the property as one entity. This is different from joint tenancy; each joint tenant is seen as owning a separate share of the property, and is free to break the joint tenancy at any time.

EXAMPLE: Fred and Ethel hold title to their house in tenancy by the entirety. If Fred wanted to sell or give away his half-interest in the house, he could not do so without Ethel's signature on the deed.

Other differences may also be important to you. In general, tenancy by the entirety property is better protected than joint tenancy property from the creditors of just one spouse. If someone sues one spouse and wins a court judgment, in most states the creditor can't seize and sell tenancy by the entirety property to pay off the debt. And if one spouse files for bankruptcy, creditors generally can't reach or sever property held in tenancy by the entirety.

How to Terminate a Tenancy by the Entirety

A tenancy by the entirety ends while both parties are alive if:

  • the couple sells the property to a third party
  • both parties agree to end the tenancy by the entirety (but one party can't accomplish this alone), or
  • the couple gets divorced.

In these events, the parties then co-own the property as tenants in common.

A tenancy by the entirety also terminates when one spouse dies; the other spouse then owns the property alone.

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