Friends discussing the tenancy by the entirety definitions.

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Everything You Need to Know About Tenancy by Entirety

What exactly is tenancy by the entirety and how does it differ from other types of tenancy? Trust & Will explains what you need to know.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

Interested in owning real estate with your spouse? There are several types of ownership structures to choose from, one of which is tenancy by the entirety. This legal form of ownership provides each spouse with the right of survivorship, which is a popular method of transferring property interest. Keep reading to find out how tenancy by the entirety works, its advantages and disadvantages, and how it differs from other types of tenancy.

What is tenancy by the entirety?

Tenancy by the entirety is a legal term that describes one form of shared property ownership utilized by married couples. Tenancy by entirety allows two spouses to own property jointly. They are treated as a single entity through the legal lens, meaning that each spouse has an equal, singular interest in the property (not divided.) Using tenancy by the entirety creates a right of survivorship. When one spouse passes away, the surviving spouse would automatically inherit the full title to the property. Learn more about the right of survivorship here. 

What is the main characteristic of a tenancy by the entireties?

The key characteristic of a tenancy by the entirety is that each spouse in a married couple holds equal interest in the property they own. There are other types of joint tenancy in which co-owners of a property can arrange to hold unequal shares of property interest. However, in this case, interest can only be held equally. Neither spouse owns more or less. 

This also means that a spouse cannot take actions regarding the property on their own. They cannot autonomously decide to sell, gift, transfer their property interest. Anything decision pertaining to the property title must be made unanimously by both spouses. Tenancy by the entirety thus provides each spouse certain protections. One spouse cannot purposefully take actions impacting property interest without the knowledge and consent of the other.

Does tenancy by entirety carry the right of survivorship?

Yes, tenancy by the entirety does carry the right of survivorship. If one spouse were to pass away, then the surviving spouse absorbs the deceased spouse’s property interest. This means that they end up with 100 percent of the property interest.

The right of survivorship takes place automatically. This means that parties involved do not have to go through the probate process or take other types of court actions to inherit property. The only action step is to file a copy of the decedent’s death certificate and a declaration stating the date of death through the county recorder office.

Tenants in common vs tenants by the entirety - what’s the difference?

Tenants in common and tenants by the entirety are real estate ownership structures that allow multiple parties to own property jointly. 

However, there are several key differences between tenants in common vs. tenants by the entirety. First, in a tenancy by the entirety arrangement, a tenant cannot sell or transfer their property interest without the approval of the other tenant. If one of the spouses were to pass away, the surviving spouse would automatically inherit the property interest (and not to other potential heirs of the decedent.) This function is called the right of survivorship. 

Tenancy in common does not come with the right of survivorship. Further, tenants can hold unequal portions of property interest, and each tenant has the freedom to sell or transfer their personal share of the interest. They can do so without the approval of the other owners. 

Last but not least a tenancy by the entirety cannot be converted to a tenancy in common or joint tenancy by transferring property. The married couple must get a divorce or obtain a marriage annulment if they wish to change or cancel  the tenancy by the entirety. 

Is tenancy by the entirety right for you?

If you’re interested in owning property jointly with another person, there are several types of tenancy to choose from. Tenancy by the entirety is a popular choice for married couples buying property together, especially since it offers the right of survivorship. Here are the advantages and disadvantages of tenancy by the entirety to consider. 

Pros of tenancy by the entirety

  • Creditor protection: Tenancy by the entirety protects the property from creditor claims against just one of the two tenants. If the debt was taken out individually, that tenant does not have to fear that creditors will come after the home since it is owned equally by a married couple. However, if the couple is legally responsible for the debt together, then the property is not protected from creditors.

  • Right of survivorship: Tenancy by the entirety comes with the right of survivorship, meaning that if one of the tenants were to pass away, then their property interest would be absorbed by the surviving tenant. The ownership would not flow directly to the decedent’s heir or estate.

  • Avoid probate: Due to the right of survivorship, property title is conveyed automatically from the deceased spouse to the surviving spouse. This means that the surviving spouse will become the complete owner of the property without it having to go through the probate process.

  • Unanimous decision-making: Due to the legal structure of tenancy by the entirety, tenants cannot make unilateral decisions regarding the property interest. For instance, they can’t sell, gift, or convey their property rights to a third party. This means that the other tenant wouldn’t have to worry about major changes happening without their knowledge. When it comes to tenancy by the entirety, both tenants must be in agreement and take actions together. 

Cons of tenancy by the entirety

  • Equal property shares: In a tenancy by the entirety arrangement, both tenants obtain equal shares of the property interest and thus equal power. This is typically an advantage, but is a potential drawback to consider in some situations. For instance, let’s say one of the tenants bought the house using their own funds but decides to bring on their spouse as an equal owner. If the couple were to divorce, that tenant cannot recuperate their investment in the property since it would be split equally.

  • Temporary: If one of the spouses passes away, the tenancy by the entirety arrangement ceases to exist. Thus, the surviving spouse loses its asset protection feature mentioned earlier.

  • Creditor claims: Mentioned earlier, a tenancy by the entirety property is protected from creditor claims if only one tenant is responsible for the debt in question. However, the protection does not apply if both tenants are responsible for the debt.

How tenancy by the entirety can affect your estate plan

Any type of asset ownership arrangement should be careful consideration, as it directly impacts your rights in regards to your Estate Plan. For instance, when using tenancy by the entirety, a tenant cannot plan to convey their property title to an heir. This is because their property title is already spoken for via the right of survivorship. If they were to pass away, then the surviving tenant would automatically absorb the property interest and become the sole owner.

Based on your circumstances, this may be the exact outcome you’d like to achieve. Perhaps this is your spouse that you love, and you would love nothing other than to have the property passed to them automatically when you pass away. 

The point here is that each ownership structure results in different estate planning outcomes, so it is important to think about your desired outcomes and choose wisely. Further, you’ll want to ensure that your Estate Plan properly incorporates your property in alignment with its ownership structure. 

As a reminder, tenancy by the entirety is just one of several different options when it comes to real estate ownership structures. We review 5 common types of tenancy in our guide. 

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