Debtor Inadvertently Forfeits Tenancy By Entireties Protection of Financial Acccount
Florida law is that personal property owned jointly by a husband and wife is presumed to be owned tenants by entireties and protected from the creditors of either spouse. Financial accounts, including bank accounts and securites accounts, titled jointly in the name of husband and wife are presumed to be entireties accounts. However, the presumption of entireties ownership can be rebutted where a creditor can show that the spouses disclaimed entireties ownership and chose another unprotected form of joint ownership. Spouse's can forfeit protection if they are not careful when the open new financial accounts.
An example of lost entireties protection is found in a bankruptcy decision from 2007 where a trustee successfully attacked the debtor's spouses securities account opened jointly by the debtor and the non-filing spouse. The new account form listed several forms of joint ownership including: joint tenants, tenants in common, tenants by entireties, and a minors custodial account. The married couple asked for a joint account, and the account application was presented with the box checked for joint tenants. Usually, under Florida law, joint tenant accounts are presumed to be entireties account. The court in this case held that because the tenancy by entireties option was offered on the account form and the spouses chose another form of joint ownership they had disclaimed, or refused, entireties ownership. The court was not convinced by the fact that almost all other titled marital property was specifically titled as tenancy by the entireties.
The case points out pitfalls that still exist under Florida law with respect to entireties ownership. Spouses must read all financial account application forms to see if tenancy by entireties is a listed ownership option. If it is, they must select the entireties option or risk losing the asset protection of the marital asset. The case is In re Mathews, 360 B.R. 732
posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida
