Tenants by Entireties: Spouses Live in Different States

A client presented an interesting question about tenants by entireties ownership. Client was married with children. His wife and children lived in New York. The client lived primarily in Florida where he ran his business. The client had a Florida drivers license, used Florida as his primary address, and appeared to qualify as a Florida resident. Before getting married, the client and his then girlfriend opened a joint stock account at the New York office of a national brokerage. The client is being sued and wants to know if his brokerage account is protected as tenants by entireties property.

Real and personal property owned jointly by husband and wife is immune from creditor levy under Florida law as tenants by entireties property. Some other jurisdictions protect T by E property by statute; Florida’s protection is based on judicial decisions of common law. The law applies to debtor’s who reside in Florida. There are no judicial decisions I know of that require the non-debtor spouse to be a Florida resident as well. Therefore, this spouse’s New York residency should not affect the debtor’s protection of the stock account.

However, there is another problem. T by E protection requires that the debtor acquired the jointly owned property during the marriage. In this instance, the debtor opened the account with his spouse before they were married. The stock account is not protected as tenants by entireties property. The debtor should open a new joint stock account with his wife in Florida. The new account will be T by E property. A creditor might argue that the opening of the new account is a “fraudulent conversion” of the debtor’s separate interest in the pre-marital stock account to the protected T by E account. The debtor would have to show other reasons for opening the new stock account other than creditor protection.

posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida