How Does Tenancy By the Entirety Work?

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KS and MO Attorney Kyle E Krull

Written by Kyle Krull

Attorney & Counsellor at Law Kyle Krull is president of the Law Offices of Kyle E. Krull, P.A., an Estate Planning Law Firm located in Overland Park, KS. Estate Planning Attorney Kyle Krull has provided continuing education instruction to attorneys, accountants, and financial professionals at local, state, and national programs.

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POSTED ON: October 9, 2020

Tenancy by the Entirety is one option for owning real estate. You are and your spouse are buying a home. This is an exciting time. It also means you need to make some decisions on ownership. How a real estate is titled is important. According to a recent Motley Fool article titled “What is Tenancy […]

Tenancy by the Entirety is one option for owning real estate.

You are and your spouse are buying a home.

This is an exciting time.

It also means you need to make some decisions on ownership.

How a real estate is titled is important.

According to a recent Motley Fool article titled “What is Tenancy by the Entirety?,” some couples choose to utilize tenancy by the entirety as their form of ownership.

Tenancy by the Entirety is one way married couples can own property together.

Married couples can own property together through Tenancy by the Entirety in some states.

What is tenancy by the entirety?

If you are simply in a relationship or just two unmarried singles, tenancy by the entirety will not apply.

If you are married, you cannot use this type of ownership with someone who is not your spouse.

This title is only an option for couples who are legally married.

It is not available in every state.

For example, Missouri permits tenancy by the entirety, but Kansas does not.

Tenancy by the entirety means both of the spouses own an 100% interest in the entire property.

If the purchase was funded by one spouse more than the other, the ownership does not reflect this.

When it comes time to sell the property, both spouses have equal rights and an equal say in what happens.

What happens if one spouse dies?

The surviving spouse will become the sole owner of the property.

If your last will and testament bequeaths the property to someone other than the spouse, the tenancy by the entirety takes priority.

Your surviving spouse will own the property.

What happens if you and your spouse divorce?

The tenancy by the entirety will be extinguished.

The property will revert to a tenants in common.

What does this mean?

Each spouse can transfer his or her own interest to whomever they choose.

If both spouses agree to a change to a form other than tenancy in common, they can do so.

What are the benefits of tenancy by the entirety?

This type of property ownership can be advantageous in estate planning and, especially, when it comes to asset protection.

It can protect the property from debts or liabilities incurred by one spouse.

A creditor can not make a claim against the property unless the debt is in the name of both spouses or the claim is against both.

Tenancy by the entirety makes each spouse a separate legal entity when it comes to ownership.

As noted above, when one spouse dies, the property can skip probate proceedings and instead transfer directly to the surviving spouse.

Each state with tenancy by the entirety has guidelines on what types of property can be owned in the manner.

What other options are there for property titling?

Tenants in Common.

With tenant in common, the two individuals do not have to be married.

Each individual holds an equal ownership interest.

When one owner dies, the share of this individual can be directed to his or her heirs rather than the surviving owner.

In most states, tenants in common is the default ownership structure.

Joint Tenants with Rights of Survivorship (JTWROS).

With JTWROS, the property passes to the surviving owner after one owner dies.

Individuals do not have to be married for this ownership option to be available.

There can even be more than two property owners.

Each owner has an equal interest in the property, but each individual can choose to sell his or her interest to another.

JTWROS does little for creditor protection.

Because owners are treated as both a separate and single legal entity, a creditor for one owner can make a lien against the property.

Sole Ownership.

This option is reflected in its name.

This deed is used when a single individual purchases a home.

It can also apply to married individuals if only one spouse is the legal owner.

Why would this be beneficial?

It is simple while the owner is alive.

One owner can make the decisions about the property.

It can make transfer on death more complicated.

Talk with an experienced estate planning attorney to determine whether tenancy by the entirety is an available option for your unique circumstances and whether it would align with your estate planning goals.

Reference: Motley Fool (Aug. 23, 2020) “What is Tenancy by the Entirety?”

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