Tenants By the Entireties ownership (“TBE”) is a form of joint tenancy ownership in real or personal property between a husband and wife. Four “unities of title” are required for joint tenancy ownership: (1) unity of interest (each joint tenant must have an equal interest including equality of duration and extent), (2) unity of title (the interests must arise from the same document), (3) unity of possession (each joint tenant must have an equal right to occupy the entire property) and (4) unity of time (the interests of the joint tenants must arise at the same time). TBE adds another unity, title between husband and wife.
In Florida, as well as other states that recognize TBE, a creditor of one spouse can not reach TBE property because the other spouse is also considered to own the whole TBE property. In a “regular” joint tenancy ownership, each joint tenant owns their proportionate share.
In a recent case, Kowalski v. Rosenaum, the court had to determine whether or not certain proceeds were TBE. Lorraine Kowalski (“Lorraine”) and her husband, Leon Kowalski (“Decedent”) were married at Decedent’s death, but had been separated for 16 years. Leon lived with a girlfriend to whom he left most of his estate. Lorraine filed a petition for an elective share of his estate.
The court appointed a special master to determine some issues, one of which was whether Lorraine needed to return certain assets to Decedent’s estate.
Prior to his death, Lorraine and Decedent sold their business real estate for approximately 3.5 million. Apparently, Lorraine kept control of the monies and Decedent came to her when he needed money. At his death, he had already received a portion of his share and the estate argued that the balance of his one-half share, approximately $700,000, was due the estate. The special master determined that Lorraine should return the money and the trial court agreed.
On appeal, Lorraine argued that the monies were held as TBE and thus, she did not have to return the money as it was wholly owned by her. A presumption of TBE arose as the proceeds were received and held from the sale of their jointly owned business real estate. She argued there was no evidence rebutting that presumption.
The court analyzed the law and determined that IF a bank account is TBE, then each spouse owns the whole. When a married couple holds money in a jointly titled bank account, a rebuttable presumption arises in favor of TBE unless the terms of the account disclaim the TBE. However, these funds were NOT held in a bank account as TBE, but in her name alone.
The court noted that while the business real estate was marital property and the proceeds from such sale would be considered marital property, the character of such proceeds can change. The issue was whether Lorraine and the Decedent intended to hold the proceeds as TBE. TBE can be terminated by an agreement of the parties but can also be inferred from the conduct of the parties.
While Lorraine testified that the proceeds were held by her and she did not expect that the proceeds would be necessarily divided in half, she admitted that she had paid him over a million and if he had continued to ask for his “half” she would have given him such proceeds.
The appellate court agreed with the special master that Lorraine and the Decedent intended to each own a half of the proceeds. Further, TBE ownership terminates when one of the parties maintains sole control of the property and the other party can no longer exercise control over the property.
Lorraine exercised control over all of the proceeds and her testimony was that she would never have given the Decedent more than one-half of the proceeds. Thus, she was ordered to return the balance of Decedent’s proceeds to the estate.
ADVICE: If you want TBE property make it clear in the documentation by noting TBE. Also look for possible new legislation which will clarify that a joint bank account is TBE even without a unity of time. For example, you can add a spouse’s name to an account and the account will be TBE even though the unity of time is not met.
WORD OF THE WEEK: Special master (now called a special magistrate) is an adjunct of the court and appointed by the court to perform specific tasks. They are appointed by a presiding judge to service in a specific case. The master’s authority is only given from his or her appointment by the court.
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