Tenants by the Entirety Protection Doesn’t Work Great

Some people own property, often a home as “tenants by the entirety” or TBE. This is a special form of joint ownership that is used to protect that property from third party claimants. However, TBE is a very limited and often insufficient asset protection step. important limitations: (1) the deed or title document must clearly indicate that husband and wife are taking title, the marital designation must be clear; (2) there is no protection from joint creditors, and (3) there is no protection after the first spouse’s death. These are very limiting factors on TBE protection. To preserve TBE protection, explicitly deed property to spouses as “husband and wife,” acquired (or retitled) during marriage, avoid trust conveyances or unilateral powers, maintain mutual consent, and steer clear of creditor reactive transfers, because NJ’s protection is statutory, formalistic, and easily lost TBE arises when spouses take title together while married or when pre-marital property is formally conveyed into TBE during marriage. A creditor may obtain and docket a judgment, but no forced sale or partition is permitted. Transferring the TBE property to each spouse’s revocable trust in most states destroys TBE protection ( FL, VA, TN by statute allow TBE assets to be held in revocable trusts). Bear in mind the rules differ by state.

Property owned individually before marriage is not automatically converted. If you own separate pre-marital property use a confirmatory deed post marriage to secure TBE.