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Andrew H. Thompson, Esq.

When considering the options for ownership of property, most people only consider whether to own the property individually or jointly with another person.  However, joint ownership of property can take three distinct forms, each with different rights and implications: (1) tenants-in-common; (2) joint tenants with rights of survivorship; and (3) tenancy-by-the-entireties.  We are going to explain the main differences between these forms of joint ownership, and some of the main advantages and considerations in owning property as tenants by the entireties.

Tenants-in-Common

In Florida, if you take title to property with someone other than your spouse without expressly providing for rights of survivorship, the resulting form of ownership will be a tenancy in common.  Fla. Stat. § 689.15.   One of the main differences between tenants-in-common (“TIC”) and other forms of joint property ownership is that there is no right of survivorship with property held as tenants-in-common.  As a result, (1) each ownership interest can be transferred without the consent of the other co-owner(s); and (2) when a co-owner dies, his or her interest in the property becomes part of his or her probate estate.    Also, when property is held as TIC, one owner can sue the other owner(s) to force a sale of the property through court action (known as a partition action).

Joint Tenants with Rights of Survivorship

Alternatively, if unmarried individuals own property and provide for the right of survivorship, the resulting form of ownership will be joint tenants with rights of survivorship (“JTWROS”).  When property is held between co-owners as JTWROS and one of the co-owners dies, the property will pass to the surviving co-owner(s) by operation of law, without the need for a probate administration.  To hold property as joint tenants with rights of survivorship, the owners must acquire the same interest in and control over the property at the same time and provide that ownership is with rights of survivorship.  As with property held as TIC, property held as JTWROS can be severed through a partition action.

Tenancy-by-the-Entireties

In Florida, married co-owners are able to take title in their individual names as tenants by the entireties (“TBE”).  It is important to note that the owners must be married when taking title to property for this to apply.  As such, if two co-owners of a particular property later married, the property does not then convert to TBE because the owners were not married at the time they took ownership of the property. 

Unlike TIC or JTWROS interests, TBE property cannot be severed (or partitioned) without the action of both spouses.  Also, a creditor can only place a lien on TBE property when the creditor holds the same claim against both spouses. 

One of the many advantages to living in Florida is that in Florida, TBE extends to tangible and intangible personal property (including financial accounts).  Beal Bank, SSB v. Almand & Associates, 780 So.2d 45 (Fla. 2001).  That being the case, if you have determined that TBE ownership is appropriate, you should take steps to confirm that ownership designation is reflected whenever possible. 

Important Considerations with TBE

While in many instances TBE will be the recommended form of ownership for married couples, there are some reasons TBE may not be appropriate for everyone or every asset.  Some of the main potential drawbacks to owning assets as TBE are:

  • TBE is likely to be considered a marital asset and subject to equitable distribution and divided equally if you and your spouse get a divorce
  • If a court finds that conversion of property to TBE is an attempt to hinder, delay or defraud a past, present or future creditor under applicable law, the property likely will not be protected from creditor’s claims
  • In certain circumstances, the rights of some creditors, “super creditors” such as the Internal Revenue Service, will override TBE protection
  • TBE may not provide protection if there is a change in case law
  • TBE will not provide protection to a surviving spouse with a judgment or action pending against him or her
  • It is often not wise to own an asset as TBE when there is risk associated with the asset (e.g., a boat, rental property, etc.) because this would subject both parties to liability and there may be a better form of ownership available

TBE Planning Opportunities

With the enactment of the tax act in December, many clients are reviewing their current estate planning documents and beneficiary designations to determine whether updates are needed or additional planning opportunities exist.  While we would certainly recommend you review your documents, it is also critically important to review titling of assets and confirm title is held: (1) as you believe; and (2) in a manner that is most advantageous to you and your family.  Changes in the estate tax law (particularly, allowing for portability) could mean that advice you were given even a few years ago regarding the titling property in separate names or in separate revocable trusts is no longer optimal.

While often not a subject given much thought, hopefully you can see that the decision regarding the form of ownership of any asset is critically important and should be made with the assistance of a legal advisor.  We encourage you to contact us with any questions you may have on this topic.