What Are Tenants by Entirety (TBE)?
Let me explain tenants by entirety (TBE) directly to you: it's a way that married couples in some states can hold title to property. If you're in a marriage and own something under TBE, you can't change your interest in it without your spouse's full consent. And when one of you passes away, the surviving spouse automatically gets complete ownership of the property.
Understanding Tenants by Entirety (TBE)
To make this clear, consider this example: if you and your spouse own a vacation home under TBE, you as the husband couldn't sell your share without your wife's agreement. That's the level of mutual control we're talking about here.
You should know that about half of the U.S. states permit TBE for all kinds of property, from real estate to bank accounts, financial holdings, and even business assets. A few states limit it strictly to real estate. As alternatives, couples might opt for tenancy in common or joint tenancy. Each of these affects how you can transfer the property, use it as collateral, what happens when one spouse dies, and whether it can cover debts or judgments.
How Tenants by Entirety Are Viewed From a Legal Perspective
From a legal standpoint, TBE is similar to community property in that both spouses own the entire asset together, not in divided parts. But here's a crucial difference: creditors can't seize the property to collect on one spouse's debt alone under TBE. Only if both spouses owe the debt can it be attached. This isn't true for community property, where the asset can be targeted regardless of who incurred the debt. Also, federal tax liens against one spouse might attach to TBE property in certain cases, potentially leading to seizure.
Another key point is that TBE rights can override a will or trust. Say a deceased spouse's will tries to pass property to a child; if it's under TBE with the surviving spouse, that will gets ignored, and you as the survivor keep full ownership.
You can end a TBE arrangement through divorce, which divides the property, or by both spouses agreeing to petition for a change in ownership type.
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