Tenancy by the Entirety in Pennsylvania: Protecting Your Marital Assets in Bankruptcy
Filing for bankruptcy can feel overwhelming, especially for married couples worried about losing their property. However, Pennsylvania’s tenancy by the entirety laws provide unparalleled protection, offering unlimited real estate equity protection while also shielding both real and personal property. These laws allow married couples to preserve their financial stability, protect their most valuable assets, and secure a fresh start. Here’s what married debtors need to know about how these laws can safeguard their property during bankruptcy.
What is Tenancy by the Entirety?
Definition: Tenancy by the entirety is a unique form of co-ownership for married couples. Each spouse owns 100% of the property, with a right of survivorship, meaning the property passes to the surviving spouse upon the other’s death.
• Purpose: Protects marital assets from individual creditors and ensures smooth property transitions.
Who Benefits?
• Applies to All Married Couples:
• The landmark case Whitewood v. Wolf (2014) legalized same-sex marriage in Pennsylvania, extending tenancy by the entirety protections to all married couples. See Whitewood v. Wolf, 992 F. Supp. 2d 410 (M.D. Pa. 2014).
Protections for Marital Property
1. Real Property
• Unlimited equity protection for real estate held as tenancy by the entirety.
• Example: You can file bankruptcy with over $1 million in real estate equity, and it remains protected as long as the debt is in one spouse’s name with no joint debt.
2. Household Goods and Furnishings
• Presumed to be entireties property if acquired during the marriage and used by both spouses.
• Key Case: DiFlorido v. DiFlorido, 459 Pa. 641, 331 A.2d 174 (1975).
3. Vehicles
• A vehicle titled in one spouse’s name but acquired with joint funds is considered entireties property.
• Key Case: Simon v. Simon, 286 Pa. Super. 403, 429 A.2d 1 (1981).
4. Joint Bank Accounts
• Protected from the creditors of one spouse. If one spouse passes, the surviving spouse retains full ownership without creditor attachment.
• Key Case: United States Nat. Bank v. Penrod, 354 Pa. 170, 47 A.2d 249 (1946).
5. Personal Property
• Tangible non-business personal property acquired during marriage is presumed to be entireties property.
• Key Case: Miller v. Miller, 34 Pa. D. & C. 3d 82 (1984).
6. Retirement Savings Plans
• Retirement savings accumulated during marriage are considered entireties property if supported by joint contributions.
• Key Case: Hengst v. Hengst, 491 Pa. 120, 420 A.2d 370 (1980).
Limits to Tenancy by the Entirety Protections
• Joint Creditors: Entireties property is not protected from joint debts owed by both spouses. See Napotnik v. Equibank, 679 F.2d 316 (3d Cir. 1982).
• Federal Tax Liens: Federal tax liens can attach to entireties property even if only one spouse owes the tax. See United States v. Craft, 122 S. Ct. 1414 (2002).
Why These Protections Matter in Bankruptcy
• Individual Debts: Entireties property cannot be used to satisfy debts owed by one spouse alone, ensuring the non-debtor spouse’s rights are preserved.
• Fresh Start: These protections help married couples retain essential assets like their home, furniture, and retirement savings while discharging unsecured debts.
Conclusion
For married couples in Pennsylvania, tenancy by the entirety offers robust safeguards against creditors and ensures that marital property is protected during bankruptcy. If you’re concerned about your assets, consult an experienced bankruptcy attorney to discuss how these protections can help you achieve a fresh financial start.
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