Joint Tenancy by the Entirety (JTBE) is a type of property ownership specifically for married couples, offering asset protection against creditors for debts incurred only by one spouse. Similar to joint tenancy, where property is co-owned by two or more individuals, JTBE includes a right of survivorship. This means that when one owner passes away, their share automatically transfers to the surviving owner without going through probate.
Under JTBE, both spouses equally own the property, meaning each owns 100% of the asset, and the couple is viewed as a single legal entity. This arrangement can protect JTBE assets from creditors if only one spouse is being sued, as the creditors cannot target both spouses.
It is advisable to hold bank accounts, brokerage accounts, and real estate as JTBE. To establish JTBE ownership, both spouses must be married and open the account together; one spouse cannot simply be added to an existing account.
However, when it comes to automobiles, it's recommended that each spouse individually owns the car they drive most often. If you are involved in an accident in your own car, creditors can only claim against assets held in your individual name, leaving JTBE assets protected. However, if you are driving your spouse's car during an accident, creditors may gain access to your JTBE assets.
To mitigate risks that comes from automobile ownership, it is advisable to secure an umbrella liability insurance policy with an uninsured motorist rider. You can purchase an umbrella policy through your automobile insurance company. A minimum coverage of $1,000,000 is recommended, but depending on the value of your assets, you may be better protected with a policy ranging from $2,000,000 to $5,000,000.
Key Points:
- JTBE is only available to spouses;
- JTBE assets are owned 100% by both spouses;
- JTBE can offer asset protection if a debt is owed by only one spouse;
- Automobiles should not be owned by any type of joint ownership;
- Retirement accounts, life insurance, annuities, and your homestead are creditor protected assets; and
- Florida is one of twenty-five states that offer JTBE.