Common Forms of Property Ownership
1. Joint Tenancy: Property is owned by two or more persons at the same time in equal shares. Unity of time, title, interest, and possession is vested in each joint tenant (four unities). Each joint tenant has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically vests in the surviving joint tenant(s) by operation of law.
2. Tenancy by Entireties is a special type of joint ownership of property with rights of survivorship only allowed between a husband and wife. Much like a joint tenancy, a husband and wife who own property as tenancy by entireties each own an undivided interest in the property, each have full rights to occupy and use the property and each spouse has a right of survivorship.
3. Sole Ownership: Property is owned entirely by one person.
4. Tenants in Common: Property is owned by two or more person at the same time. The proportionate interests and right to possess and enjoy the property between the tenants in common need not be equal. Upon death, the decedent’s interest passes to his/her heirs named in their will, whom then become new tenants in common with the surviving tenants in common.
Which is the best TITLE for a married couple?
In Pennsylvania, Tenancy by Entireties is a venerable institute of the common law. Husband and wife own an estate in entireties as if it were a living tree, whose fruits they share together. Under Pennsylvania law, marital property that is held by spouses as tenants by the entireties is not subject to the debtor-spouse’s creditors. Livingston v. Unis, 659 A.2d 606, 611 (Pa. Commw. Ct. 1995); see also In re Brannon, 476 F.3d 170, 173 (3d Cir. 2007). In other words, debts of one spouse do not affect property held by Tenancy by Entireties. Creditors of one spouse are NOT ALLOWED to foreclose on property held by Tenancy by Entireties.
Creditors cannot attack an innocent spouse “if” TITLE is Tenancy by Entireties
Entireties property may not be accessed by the creditors of only one spouse. As the Pennsylvania Supreme Court explained in Madden v. Gosztonyi Savings & Trust Co., 331 Pa. 476, 200 A. 624 (1938), with respect to property owned by the entireties, neither spouse “has any individual portion which can be alienated or separated, or which can be reached by the creditors of either spouse.”
Special bankruptcy protection afforded to property TITLED Tenancy by Entireties
A Tenancy by Entireties has a number of unique features designed to protect the property of husband and wife. The bankruptcy exemptions provide UNLIMITED PROTECTION of equity in real estate and personal property if said property is titled Tenancy by Entireties – assuming that the debts in question are only in one spouse’s name. This is extremely important caveat as joint debts are not afforded protection. The ability of the husband and wife to shield property through this form of ownership is to some extent in friction with the bankruptcy process of making a debtor’s assets available to creditors.
Nonetheless, the attributes of entireties ownership remain intact while the trustee holds the property following the filing of a bankruptcy petition unless, or until, spouses fail to seek exemptions for the entireties assets. It is imperative that a husband and wife utilize the Pennsylvania State exemptions if they have substantial equity in their real estate.
Conclusion
Check your deed and ensure that it clearly states: “Tenancy by Entireties – Husband and Wife” and place all your debts in one (1) spouse’s name to maximize your protection under both Pennsylvania state law and Federal bankruptcy law.
