Tenants by Entirety (TBE)
What it is
Tenants by the entirety (TBE) is a form of co-ownership available to married couples in many U.S. states. Under TBE, the couple is treated as a single legal unit that owns the whole property. Key features are mutual consent for transfers and an automatic right of survivorship: when one spouse dies, the survivor becomes sole owner.
How it works
- Title: Property must be expressly titled as “tenants by the entirety” (or similar language) to create this form of ownership. States vary in required phrasing and recordation.
- Transfer: Neither spouse can unilaterally sell, mortgage, or encumber the property; both must agree.
- Survivorship: Upon the death of one spouse, ownership automatically vests in the surviving spouse without probate.
Legal effects and protections
- Creditor protection: A principal advantage is protection against creditors of one spouse. Generally, a creditor of only one spouse cannot attach TBE property; attachment is allowed only if both spouses are jointly liable for the debt.
- Exceptions: Federal tax liens, certain state rules, or specific creditor claims may override TBE protections in some circumstances. State law varies on the extent of protection.
- Estate planning: TBE supersedes provisions in a will or trust that would otherwise transfer jointly held property at death; the surviving spouse’s rights take priority.
How TBE differs from other ownership forms
- Joint tenancy — Both provide survivorship, but a joint tenant can usually unilaterally sever the tenancy (creating tenants in common). TBE requires both spouses’ consent to change title.
- Tenancy in common — Owners hold separate shares with no survivorship right; each can transfer their share without the other’s consent.
- Community property — Treated as shared ownership between spouses, but creditors of one spouse may sometimes reach community property depending on state law; community property has different tax and probate implications.
What property can be held as TBE
States differ. Some permit TBE only for real estate; others extend it to bank accounts, investment accounts, vehicles, and even business interests. Always check state law.
How TBE can end
- Death of a spouse (survivorship).
- Divorce — Many states convert TBE to another form of ownership or divide the property as part of divorce proceedings.
- Mutual agreement — Both spouses can agree to convert or convey the property.
- Court order — Judgments or liens that meet statutory exceptions can force sale or attachment in limited situations.
Practical considerations
- Creating TBE: Use the correct deed language or account title as required by your state. Consult an attorney or title professional.
- Mortgages and refinancing: Lenders typically require both spouses to sign mortgage documents; the loan obligation is separate from title ownership.
- Estate planning: TBE can simplify transfer at death but may conflict with beneficiary goals or estate plans — consider whether TBE suits your broader planning needs.
- Creditor exposure: If creditor protection is a priority, verify state-specific protections and exceptions (especially for federal tax liens).
Key takeaways
- TBE is a strong form of spousal co-ownership with survivorship and limited transfer rights.
- It offers significant—but not absolute—protection from individual creditors.
- Availability and scope depend on state law and the type of property.
- Always confirm state requirements and consult a legal or estate-planning professional before creating or changing TBE.