"An estate by the entireties can be created in property capable of being held as an estate by the entireties where a conveyance of transfer is made to husband and wife without expressly specifying how they are to take." (5) It is the unity of title in the property interest that is relevant, not the quantity of the property interest.
Transferring the proceeds of the sale of an entireties property to a trustee for the benefit of the husband and wife does not terminate the unities of title or possession, where the parties clearly intended their property to be held as tenancy by the entireties by exercising beneficial ownership of the property and controlling the property's disposition.
Although not in issue, in a footnote the district court stated, "There is no dispute that the effect of this transfer to the trustee destroyed any tenancy by the entireties that may have existed in the property pre-transfer.
Appellants suggested that Rollins stands for the proposition that a transfer to a trustee of entireties property in and of itself terminates the entireties.
As to ownership of real property by husband and wife, ownership in the names of both spouses vests title in them as tenants by the entireties. (9) In the case of real property, it is unnecessary to describe the owners as husband and wife in the deed in order to establish a TBE, although it is better practice to do so.
Unlike real property, Florida law has historically treated personal property differently and required that not only must the form of the estate be consistent with entireties requirements, but also the intention of the parties must be proven.
The trial court found that the bank account in question was not held as an estate by the entireties, but as joint tenants with right of survivorship, because either of the joint depositors had the power to alienate the account by closing it out and could achieve this alienation individually and without consent of the other.
Another reason for the distinction is that the application of entireties concepts to personalty becomes exceedingly complex as the nature of the personalty increases in sophistication, and the judicial mind seeks to require greater safeguards lest the tenancy be abused.
Like Michigan and Florida, approximately 25 states recognize tenancy by the entireties ownership, and historically do not allow a creditor with a judgment against an individual owner to seize or encumber property that belongs to the individual as tenants by the entireties.
The present interests provided the husband with "a substantial degree of control over the entireties property" as found by the court and therefore were subject to the federal tax lien.
The court expressed its concern that if it did not identify present "sticks" for the tax lien to attach to, that entireties property would belong to no one for [section] 6321 purposes.
The court found that the husband's present rights gave him a substantial degree of control over the property and, therefore, such rights were sufficient to subject his entireties interest to the federal tax lien.
Consequently, a debtor could theoretically own all of his or her assets as tenancies by the entireties, receive a full discharge, and exit the bankruptcy process with an enormous amount of property.
Thus, in the Southern District, if your case is heard by Judge Cristol, all creditors of the estate may share in the proceeds from the sale of entireties property if a small joint claim exists. However, these proceeds would be exempt for a similar individual living in the Southern District who might have his or her case heard by Judge Mark. This provides an apparent lack of justice for both the creditors and the debtor.
Through this mechanism, Congress could alleviate confusion in states such as Florida by recognizing the inherent difficulties in allowing the tenancy by the entirety into bankruptcy law. By limiting the destruction of the entireties doctrine in bankruptcy situations to only those states with a homestead exemption, Congress could feel secure that the state legislature has made provisions to protect a potential debtor's real estate.