Tenancy by the Entirety of a Home and Asset Protection

Tenancy by the Entirety of a Home and Asset Protection

How might a tenancy by the entirety protect my house from lawsuits and claims?


A "tenancy by the entirety" is a special form of joint ownership between husband and wife. Generally it only applies to a residence, but in some states other assets may be owned in this manner. If you are sued and own a house in as a Tenant by the Entirety with your spouse, the theory is that you each have an undivided right to live in the house for life. So your claimants cannot exercise their rights against your house so long as your spouse lives there. The protection is far from guaranteed (state law has exceptions, many states don't recognize the benefit, your spouse may die or divorce, etc.). However, in some cases it is a worthwhile step to take, especially if the other options are not better.

Other options you might consider could be a qualified personal residence trust ("QPRT"), having another type irrevocable trust own the house, give it solely to your spouse (that is often not an ideal move for lots of reasons), etc.

A major reason many wealthy people don't use Tenants by the Entirety (other than thinking putting the house in one name is a solution which it isn't) is because for estate tax reasons many people own their home as Tenants in Common so that if either spouse dies they can use 1/2 the value of the house to fund a by pass trust under their will.

While your question inquired about specific state law, we don't give any specific advice by state. You'll have to consult a real estate attorney and estate planner in your state.

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