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Topic: Tenants by the Entirety


By Milton Babirak, JD, LLM      |      Babirak Carr, PC     |     Sterling, VA

Tenants by the Entirety (“t/e”) is a form of joint ownership of property by husbands and wives. If you are married and own a home, there is a very good chance that you own it as t/e. When the first spouse dies, the surviving spouse automatically owns all of the property by operation of law and nothing passes to the deceased spouse’s heirs, distributees, or beneficiaries. Neither the husband or the wife can sell or transfer property owned as t/e without the other person’s consent. Significantly, not just real estate can be held in t/e. Personal property can be held in t/e. A husband and wife can transfer t/e property to their revocable trusts and the t/e attributes will continue.


T/E and Estate Planning. T/e is an estate planning tool. Since it is a form of joint tenancy, any property owned as t/e can pass automatically by operation of law to the surviving spouse. No will or revocable trust is needed. Now, this can be good or this can be bad. It is good because it is simple. But it is bad if your spouse does not survive you, is disabled or is not good at managing financial assets.


Asset Protection. Generally speaking, t/e property is immune from the claims of creditors of either tenant during the lifetime of the non-debtor spouse, but not from the claims of creditors of both tenants. At first, this may not seem significant because you may not have any outstanding bills. But consider this example: what happens if one spouse (maybe an elderly spouse) is at fault in a serious car accident and the injuries and damages are well beyond your auto and umbrella insurance? In such a case, your t/e property may be protected from the claims of the injured party. What about uninsured claims against you at work for things like gender, racial, age or other discrimination? Uninsured director or officer liability?

If you title your personal property (like your investment accounts, bank accounts, etc.) in t/e, those assets might also be protected from such claims. It is a good idea to consult with you lawyer about this but the actual retitling of your personal property assets can be done by a bank officer or your investment advisor.

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