Tenancy by the Entirety (TBE)

Tenancy by the entirety is a form of joint property ownership open only to married couples, in which the spouses are treated as owning the whole property together rather than owning separate shares of it. Cornell's Legal Information Institute describes it as "a type of shared ownership of property recognized in most states, available only to married couples," in which each spouse holds "an undivided interest in the property," each "has full rights to occupy and use it and has a right of survivorship," and, critically, "cannot transfer their interest in the property without the consent of the other spouse." That last feature is what separates it from the other two co-ownership forms, joint tenancy and tenancy in common, and it is the source of everything else the estate does.

The unity of person, and why it produces the creditor result. In a joint tenancy or a tenancy in common, each owner holds an identifiable interest. That interest can be sold, and it can be seized. Tenancy by the entirety rests on the older idea that a married couple is a single owner, so there is no separable half for either spouse to convey and, in a state that recognizes the estate, nothing for one spouse's individual creditor to attach. The creditor result is not a special protection bolted on; it follows from the ownership structure.

Virginia's statute shows the mechanics in force today. Code section 55.1-136 provides that "spouses may own real or personal property as tenants by the entirety for as long as they are married," that an intent to create the estate "shall be manifest from a designation of the spouses as 'tenants by the entireties' or 'tenants by the entirety,'" and that, "[e]xcept as otherwise provided by statute, no interest in real property held as tenants by the entirety shall be severed by written instrument unless the instrument is a deed signed by both spouses as grantors." Read the last clause carefully: it is the anti-severance rule, and it is exactly what a joint tenancy lacks, since a joint tenant can ordinarily sever unilaterally. Note also that it opens with a carve-out for other statutes, which is a reminder that even the state's clearest statement of the rule is not the whole of that state's law.

Where it is available, and how to find out. The Legal Information Institute's hedge, "recognized in most states," is the honest ceiling and this page does not improve on it. A worked example of the other side: California's Civil Code section 682 lists the ways several persons may own property as "(a) Of joint interest. (b) Of partnership interests. (c) Of interests in common. (d) Of community interest of spouses." Tenancy by the entirety is not on that list. That is a measured absence in one named statute rather than a claim about the country, and it is the shape of check worth running: read the co-ownership provisions of the state where the land sits.

Real property, personal property, or both. Whether the estate reaches bank accounts and securities as well as land is a separate question answered state by state. Virginia answers it expressly and broadly: section 55.1-136 says personal property may be held this way "whether or not the personal property represents the proceeds of the sale of real property." The explicitness is itself informative, because a statute rarely says something that plainly unless the point was contested. Where a state's law is silent, the answer has to come from that state's cases rather than from an assumption.

How far the creditor protection actually goes. Two federal provisions mark the boundaries precisely, and they run in opposite directions.

The Bankruptcy Code defers to state law rather than supplementing it. Section 522(b)(3)(B) of title 11 lets a debtor exempt "any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law." The protection in bankruptcy is therefore exactly as strong as the state's own rule and no stronger. A state that does not shield entireties property from process gives its residents nothing here.

Federal tax collection is the documented exception. In United States v. Craft, 535 U.S. 274 (2002), the Supreme Court considered Michigan entireties property against a federal tax lien arising from one spouse's unpaid income tax, and concluded "that respondent's husband's interest in the entireties property constituted 'property' or 'rights to property' for the purposes of the federal tax lien statute." The Court expressly acknowledged that Michigan reaches the opposite result for state-law creditors, quoting a 1918 Michigan decision holding that entireties land "is not subject to levy under execution on judgment rendered against either husband or wife alone." So the accurate statement is narrow: the estate can defeat an ordinary judgment creditor of one spouse in a state that so provides, and it does not defeat the Internal Revenue Service.

What ends it. The marriage is the estate's foundation, so a divorce ends it, and what the co-ownership becomes afterward is set by the law of the state where the property sits. Death ends it in the other direction: the survivor holds the whole, by operation of the title, without probate. For federal estate tax the result is fixed by statute rather than by state law. Internal Revenue Code section 2040(b) treats an interest held by a decedent and their spouse as tenants by the entirety as a "qualified joint interest," and provides that "the value included in the gross estate with respect to such interest by reason of this section is one-half of the value of such qualified joint interest," regardless of which spouse paid for it. Half in, half out, which is a simpler rule than the tracing exercise section 2040(a) imposes on unmarried joint owners.

Creating the estate is a titling decision, and its consequences appear later, in three separate situations.

1. At titling. The deed has to say so. Virginia requires the intent to be manifest from designating the spouses as tenants by the entirety, and a state that recognizes the estate will have its own words. A deed that names two married people and says nothing more usually creates something else.

2. When one spouse's creditor comes. In a recognizing state, a judgment against one spouse alone is generally not enforceable against the property. A judgment against both is a different matter, and so is a debt both spouses signed for, such as the mortgage.

3. At death or divorce. Death passes the whole to the survivor outside probate. Divorce ends the estate, and state law determines what replaces it.

A hypothetical example of the second situation. A married couple own their home as tenants by the entirety in a state that recognizes the estate. The home is worth $410,000 and carries a $250,000 mortgage both spouses signed, leaving 410,000 − 250,000 = $160,000 of equity. A supplier obtains a $60,000 judgment against one spouse alone, arising from that spouse's business. In this state the supplier cannot force a sale of the home to collect, because there is no separable interest belonging to that spouse to seize. Three things would change the answer: a judgment against both spouses; the mortgage lender enforcing a debt they both signed; or a federal tax lien, which under United States v. Craft attaches to a spouse's interest even where ordinary creditors are shut out. All figures are hypothetical, and the creditor outcome depends entirely on the law of the state where the property sits.

Pros

• In a state that recognizes it, the strongest routine protection an ordinary married couple gets against one spouse's individual creditors, obtained by titling rather than by setting up an entity or a trust.
• The survivor takes the whole property automatically, without probate.
• Neither spouse can be pressured or tricked into conveying or mortgaging the property alone, since both signatures are required.
• Federal estate tax treatment is simple: section 2040(b) includes exactly half, with no tracing of who paid.

Cons

• It is unavailable in some states, and where available its scope varies, including whether it reaches personal property at all. Nothing about the protection is portable.
• It offers no protection against a creditor both spouses owe, which includes the mortgage and most joint debt.
• It does not stop a federal tax lien from attaching to a spouse's interest, per United States v. Craft.
• Divorce ends it, and so does the death of a spouse, so it is protection tied to a marriage rather than to the property.
• Requiring both signatures cuts both ways. Refinancing, selling or adding a home equity line all need a cooperative spouse.
• Because the survivor takes the whole by operation of title, it can quietly override an estate plan that assumed the property would pass under a will.