What Does Tenancy by the Entirety Mean For Couples?

Deciding how to take ownership is a critical step when purchasing real estate. It determines how your name will appear on the title and how the property is processed and protected. In some states, married couples can take a unique form of ownership known as Tenancy by the Entirety.  

What is Tenancy by Entirety?

Tenancy by the Entirety (also known as Tenants in the Entirety) is a form of ownership that legally recognizes the married couple as a single entity. In doing so, spouses hold equal ownership of the property, which arrives with many perks.  

The driving concept of Tenancy by the Entirety is to protect either spouse’s interest in a piece of property from events that exclusively involve the other. The most notable form of protection it offers is transferring full ownership to a surviving spouse when the other dies without probate. 

But the advantages are numerous, and that is precisely why many individuals view it as the best form of ownership for married couples to pursue when available to them. Here are the key benefits of this form of ownership:

• One spouse cannot sell the property without consent from the other.
• If one spouse dies, the other assumes full ownership without probate.
• Debt collectors cannot put liens on the property to collect a debt from a single spouse.

And while this form of ownership has its advantages, some setbacks may force one to consider other options. As an example, many may view sharing equal ownership of a property as more of a drawback than an actual benefit. 

Namely, because it prevents one from outright selling a property without consent from their spouse. And while this may not be something you consider a disadvantage, you should review the following before deciding on how to take ownership.

• Regardless of who paid for what, interest is shared. 
• One cannot modify their interest in the property without the consent of the other.
• It may cause tax issues, and you may want to consult with an accountant to ensure it’s your best option.

What is the difference between joint tenants with rights of survivorship and tenants by the entirety?

A Joint Tenancy with the Right of Survivorship closely resembles Tenancy by the Entirety. And in some states, this is the go-to option for married couples because it is what’s available to them. But there are a few key differences between these two forms of ownership. 

A defining characteristic of Tenancy by the Entirety is that one spouse cannot sever it by selling their interest in the property. Neither can either spouse force the other to relinquish their interest in the property. 

Also, bear in mind that while Joint Tenancy grants all owners full access to the property, each owner does own a distinct portion. Tenancy by The Entirety differs in that it recognizes two individuals as a single entity. Therefore both are considered owners of the entire property.

Tenancy by the Entirety also offers protection of the asset from debt collectors so long as only one spouse is liable. Debt collectors cannot seize the property if only one spouse is responsible for said debt.  Joint Tenancy does not offer such protection.

It’s also important to note that without the Right of Survivorship, Joint Tenancy does not guarantee the spouse will automatically be granted full ownership without going through probate in the case that their loved one passes, which is a default procedure for Tenancy by the Entirety.

What states recognize tenancy by the entirety?

As you know, only certain states recognize Tenancy by the Entirety. The good news is far from uncommon and is a form of ownership you can obtain in half the country’s states. Below is a list of the states that recognize it. 

• Alaska
• Arkansas
• Delaware
• Florida
• Hawaii
• Illinois
• Indiana
• Kentucky
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• New Jersey
• New York
• North Carolina
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• Tennessee
• Vermont
• Virginia
• Wyoming
  

If you live outside of these states, remember that Joint Tenancy with the Right of Survivorship is still an excellent option. But, if you are looking to protect your loved one’s interest and Tenancy by Entirety is an available option, there is no better way to do so.