Real property owned by a husband and wife is presumed to be held as tenancy by the entireties and the creditor must refute the presumption to gain access to the property. Moreover, to create a tenancy by the entireties under Florida law, unities of time, title, possession, marriage, and interest are required. Additionally, clients must determine whether the financial institution where they wish to create a tenancy by the entireties account provides for such accounts. If the bank or financial institution does not have tenancy by the entireties accounts, a tenancy by the entireties account cannot be created.
In this instance, the director of a bank in New Jersey who was being chased by several creditors moved to Florida and opened what he believed to be a tenancy by the entireties account with his wife. Chalk one up for the creditors. A tenancy by the entireties estate treats a marital couple as one in the eyes of the law, and as such, when property is held as tenants by the entireties, an individual spouse may not voluntarily or involuntarily alienate the property without the consent of the other spouse.
Attorneys and their clients forget that in many situations unexpected happenings cause financial disasters. For example, if a husband and wife own their automobiles jointly, in the event of an accident that causes personal injury to a third party, the tenancy by the entireties assets will be exposed to claims by the injured party. In any such event, tenancy by the entireties assets will be exposed to the claims of creditors for damages in excess of any insurance coverage. Bankruptcy Property held as tenancy by the entireties may be exempt where an individual spouse debtor institutes bankruptcy proceedings.
Under section of the Bankruptcy Code Code , when a debtor files a bankruptcy petition, a bankruptcy estate is created.
Pursuant to section b 2 B of the Code, a debtor may exempt tenancy by the entireties property if the state in which the debtor resides has opted out of the federal exemptions. If the objection is sustained, the tenancy by the entireties assets will be available for distribution to creditors. The protection ostensibly afforded to tenancy by the entireties holdings may immediately evaporate not only upon an untimely death or divorce, but such assets are now at the additional risk of the discretion of courts attempting to curtail the protective nature of tenancy by the entireties.
Michael Massey, Esq.
Tenants by the Entirety vs. Joint Tenants With Survivorship Rights
Limitations on Use of Tenancy by the Entireties. Therefore, it is conceivable that these states, either through judicial determination or legislation, will minimize these common law debtor protections. He listed his residential homestead, household goods, bank account, brokerage account, equity interests in two corporations, and a warehouse as exempt since both he and his wife the non-debtor spouse jointly held the property as tenants by the entireties.
The appellees, Amos Almand, Jr. Beal Bank obtained a foreclosure judgment and garnished nine accounts. The Almands argued that the accounts were insulated from garnishment because they were held as tenants by the entireties with their wives. The appellate court issued a per curiam opinion with the judges agreeing that a particular account was not subject to the execution and that another account was subject to execution. The judges, however, disagreed on the remaining accounts. The court held that certain accounts in the joint names were subject to execution while other joint accounts were exempt from execution.
The judges used their judicial discretion to determine if the requisite intent to create a tenancy by the entireties account was present. Judge Cobb decided that the remaining accounts should not be exempt from execution since the husbands did not know the legal significance of a tenancy by the entireties account and the wives did not testify as to the intent behind creating the accounts.
They dismissed the notion that the debtors are required to know the legal significance of a tenancy by the entireties estate to create one. Divorce In the event of a divorce, matrimonial issues will affect the ownership of tenancy by the entireties assets once a divorce is final. Tenancy by the entireties properties, both real and personal, no longer exist upon the division of the marital estate as the property is divided between the former spouses.
Once a divorce is finalized, debtors who once were protected by the tenancy by the entireties are now subject to claims made by creditors. According to U. Death of Spouse Finally, death immediately causes all assets held as tenancy by the entireties to be exposed to creditors of the surviving spouse.
Scheinhaus, Misc. Martos, Misc. Scharmach, 65 Misc. In only five cases Grigoleit v. Grigoleit, Misc. Bertolido, Misc. King, Misc. Albin, 26 Misc.
In Grigoleit it was held without discussion that, as concerns the effect of divorce on a tenancy by the entirety, there is no distinction between a New York divorce and a valid foreign divorce. The Melchers action was brought by grantees of the party who obtained the foreign divorce who were, therefore, held estopped. Matter of Dell was a proceeding by an estate creditor for security; the tenancy by the entirety problem arose as part of an alternate argument and is dicta.
In Tippin v. King, the foreign divorce obtained by the wife was followed by a New York divorce obtained by the husband; the marriage was thus terminated for all purposes. Albin v. Albin involved a Mexican divorce, granted apparently after defendant's appearance, and the construction of a written agreement between the parties concerning the property.
Only Grigoleit reaches a conclusion opposed to the thesis here advanced. Neither Grigoleit nor any other of the other four discussed the right of survivorship as a property right; all were decided prior to Vanderbilt v. Vanderbilt 1 N.
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Support for the view that, as a matter of New York real property law, a foreign divorce obtained on constructive service does not terminate a tenancy by the entirety may be found in New York dower cases see Ann. Larson, N. The Federal constitutional law argument in support of plaintiff's position is predicated upon Williams v. North Carolina U.
While that provision requires that New York recognize the Florida decree as terminating the marriage status of the parties, it does not mandate that New York give effect to the change with respect to "every legal incidence of the marriage relationship. Estin, U. Lynn, N. To argue that the defendant loses his right of survivorship because the tenancy by the entirety cannot survive without marital status merely begs the question.
The problem is: Is the Florida decree effective to terminate the marital status for purposes of New York real property law? See Bajkynicz v. Bajkynicz, 5 A. Van Cleaf v. Burns N. If we turn to the community property and estate by the entirety cases, we find that as long ago as , the Supreme Court of Nevada held, in Keenan v.
Keenan 40 Nev. As the court analyzed the problem pp.
Hence, this is not a case involving dissolution of a marriage status by decree of a court of competent jurisdiction in so far as the community property is concerned. Sake 10 Idaho , holding that one who voluntarily left Idaho and the domicile and community property located there and obtained a decree of divorce in a foreign jurisdiction could not thereafter maintain an independent action in Idaho for division of the community property.
While Bedal v. Sake was overruled in part by Peterson v. Peterson 35 Idaho on the basis of changes made in Idaho's community property statute, the court left open the question whether if the resident member of the community had challenged the validity of the foreign decree it would hold the community dissolved by the foreign constructive service divorce. That the Peterson case was phrased in terms of validity rather than jurisdiction is, perhaps, explained by the fact that it was based on Haddock v.
Haddock U. On the opposite side of the constitutional question, in addition to Grigoleit v.
2. “Restatement” (Classification)
Grigoleit Misc. Millar Md. Somonek 24 N. Calhoun 81 Cal. Buckley 50 Wn. In Millar, the Maryland Court of Appeals concluded that the full faith and credit clause mandated the result because a Maryland divorce decree would transmute the tenancy to one in common. Section 1 of article IV of the Constitution of the United States authorizes Congress to prescribe the effect in one State of the acts, records and judicial proceedings of another State. The conclusion reached by the Maryland court is contrary to the express language of section of title 28 of the United States Code, the act of Congress implementing the full faith and credit clause, which requires only that decrees of other States be given the same effect as they have by law or usage in the courts of the States from which they are taken.
Equitable Distribution in a New Jersey Divorce
Eberle v. Somonek rejected the argument that the foreign decree was "divisible and can work dissolution of the marriage without affecting title to the real estate in New Jersey" distinguishing Estin v. Estin supra and its companion case, Kreiger v. Kreiger U. As will be hereafter shown, the property right involved in support cases does not differ from that involved in this case; further, later decisions, particularly that in Vanderbilt v. The Calhoun case, while its language is flatly opposed to the thesis here advanced, is distinguishable, as are the authorities it cites, on the ground that the partition action was brought by the spouse who was the defendant in the ex parte foreign divorce proceeding.
In fact, the court specifically reserved determination of the question involved in the instant case. All three cases, as well as Buckley v.