Asset Protection for Married Couples: Tenancy by the Entireties
A well thought out asset protection plan protects estates from certain creditors. A proper plan works as an armor around your accumulated wealth, thus being an important part of your estate planning. Anyone who has accumulated wealth or is in the process of accumulating wealth needs some degree of asset protection built into their estate planning. There are several ways to achieve asset protection. In this piece, we will discuss one particular method that applies only to married couples and is generally the most simple and least costly asset protection method for spouses.
In Florida, married couples are allowed to own assets as tenants by the entireties. Such titling of assets prevents a creditor of one of the spouses from attaching the tenancy by the entireties asset. There are some limitations however. For instance, if both spouses are indebted to the creditor, then the creditor can go after the jointly owned property. In other words, the protection afforded by the tenancy by the entireties designation applies only if a creditor has a claim against only one of the spouses.
Asset protection by virtue of tenancy by the entireties ownership may not be the best plan over the long term. There is always the risk of divorce, which would instantly alter tenancy by the entireties ownership into a mere joint tenancy ownership between the ex-spouses. Thus, exposing the jointly owned assets to either of the ex-spouses’ creditors.
In all, tenancy by the entireties ownership should be taken advantage of by most married couples. However, as illustrated above, it is not foolproof and should be just one of the multiple means of asset protection in your overall plan.