Tenancy by Entirety: Protect Your Marital Property Rights
Imagine standing side by side on the front porch of your family home, knowing that no matter what happens tomorrow, both you and your spouse hold an equal share in this cherished property. For many married couples—especially federal employees who have spent years diligently serving their country—this sense of security can be achieved through a special form of property ownership known as tenancy by the entirety. This article explores the meaning of tenancy by the entirety, why it matters for federal employees, and how it can align with broader estate and retirement planning goals.
Introduction
Tenancy by the entirety (TBE) is more than just a legal term. It’s a way for married couples to own property together as one indivisible unit, offering protections that other forms of ownership simply cannot match. While many people may be familiar with “joint tenants with rights of survivorship,” TBE takes the idea of co-ownership several steps further by treating spouses as a single legal entity when it comes to certain assets.
For federal government employees—both active and retired—the structure of TBE can be especially valuable. The protections against creditors, combined with automatic transfer of ownership when one spouse passes away, can ease anxieties about ensuring a home or other joint property remains secure. In states where TBE is recognized, a married couple can use it to keep valuable real estate within the marriage and out of reach of one spouse’s individual creditors. By understanding how TBE works and how it integrates with federal benefits, you can better protect your family’s long-term financial well-being.
Understanding Tenancy by Entirety
Tenancy by the entirety is built on a simple concept: marriage merges two people into a single legal entity for purposes of owning property. From the moment both spouses acquire the property—often via the same deed—they each hold a 100% interest, yet neither spouse can sell or transfer the property without the other’s consent. This unity provides significant creditor protection, since a creditor holding a debt against only one spouse typically cannot seize the property to settle that debt. In addition, if one spouse passes away, the other automatically becomes the sole owner without enduring probate.
The catch is that not all states recognize tenancy by the entirety, and the way states handle TBE can vary widely. Some states limit TBE to real estate only, while others permit it for personal property such as bank or brokerage accounts. Certain states also have specific rules about exactly which types of assets may be protected and how TBE interacts with other forms of ownership. If you’re counting on TBE to shield your home from potential financial risk, verifying your state’s laws is a critical first step.
Below is an example of how different states treat tenancy by the entirety—though you should consult local resources or a qualified attorney for the specifics in your jurisdiction:
| State | TBE for Real Property? | TBE for Personal Property? | Special Notes |
|---|---|---|---|
| Florida | Yes | Yes | Strong creditor protection for married couples |
| Michigan | Yes | No | TBE typically applies only to real estate |
| Maryland | Yes | Yes | Commonly used for marital homes |
| New York | Yes | Varies | Must confirm exact property type eligibility |
| Virginia | Yes | Yes | TBE recognized widely for married couples |
These differences mean that federal employees transferring from one geographic region to another or considering retirement in a different state must reevaluate whether TBE is recognized and how it applies. If your state doesn’t offer it for your situation, an alternative form of ownership or an added layer of estate planning becomes necessary.
Who Benefits from Tenancy by Entirety?
Although TBE is open only to legally married couples, many of its strongest benefits often come into play for couples over age 55 who have accumulated meaningful equity in their homes and wish to protect these assets. Federal employees—who tend to have stable but often complex benefits and retirement arrangements—can find TBE particularly appealing when looking to safeguard a primary residence and ensure seamless transfers to a surviving spouse.
Imagine, for instance, that only one spouse takes on a personal business loan. Under typical joint ownership, the creditor of that spouse might place a lien on the jointly owned family home. But when property is held in TBE, it is generally shielded from the individual debts of one spouse. If you’re carrying personal debts or foresee any risk of litigation, TBE can offer peace of mind that your home remains safe. Conversely, states that do not allow TBE require you and your spouse to look into other protective structures—such as trusts—or meticulously maintain separate property to avoid entangling one spouse’s liabilities with shared assets.
Advantages and Drawbacks of Tenancy by Entirety
Tenancy by the entirety offers multiple advantages for married couples, starting with survivorship. When one spouse passes away, the surviving spouse instantly becomes sole owner of the property without going through probate. This advantage often saves significant time, expense, and emotional toll.
Another core benefit is creditor protection. Because TBE is premised on mutual ownership by both spouses, creditors pursuing the debt of one spouse generally cannot force the sale of the home to satisfy that debt. In addition, equal ownership rights foster a clear sense of marital unity. Decisions to sell or refinance must be made jointly—great for couples who want an equal voice in major family financial decisions.
Despite these upsides, TBE isn’t perfect. It isn’t recognized everywhere, and in some jurisdictions, TBE is allowed only for real property. Also, no spouse can unilaterally sell or encumber the property. That lack of individual control can become contentious if both spouses don’t see eye to eye or if the relationship deteriorates. In the event of divorce, TBE generally terminates, meaning property must be retitled or divided, which can complicate an already stressful process. Finally, it’s important to address potential tax considerations; while federal estate tax laws currently offer a generous marital deduction, high-value estates may need additional planning.
Comparisons to Other Property Ownership Forms
When considering ways to title your property, many couples encounter confusion around “joint tenants with rights of survivorship” versus TBE. While both provide survivorship, TBE is limited to married couples and generally provides stronger creditor protection. Other ownership forms, like Tenancy in Common, allow each individual to own a share that can be willed or conveyed independently, but lack the crucial creditor and survivorship benefits. Community property systems can also share similarities with TBE, though creditor rules and estate planning implications differ.
The table below highlights some of these distinctions:
| Ownership Type | Right of Survivorship | Creditor Protection | Individual Control |
|---|---|---|---|
| Tenancy by the Entirety (TBE) | Yes | High (for debts of one spouse) | No (both spouses must consent) |
| Joint Tenancy with Rights of Survivorship | Yes | Limited | Some transfers allowed if permissible by state law |
| Tenancy in Common | No | None | Owners may sell or convey their own share |
| Community Property | Varies by state | Generally less than TBE | Both spouses must typically consent to major decisions |
Choosing the right structure should be an informed decision based on your marital situation, existing debts, and overall estate planning objectives. In states where TBE is unavailable, joint tenancy might offer some benefits—just be aware that creditor protection is not usually as robust.
Special Considerations for Federal and Military Employees
Because federal employees often grapple with unique benefit structures—FERS or CSRS pensions, Thrift Savings Plan (TSP) accounts, and FEGLI insurance—it’s critical to confirm how TBE fits into the bigger picture. For instance, you cannot title a TSP account in tenancy by the entirety because TSP is governed by federal rules that override state-based property frameworks. Beneficiary designations, however, can accomplish some of your goals by ensuring the surviving spouse receives the funds without going through probate. That underscores the importance of coordinating your beneficiary designations with your property ownership plans.
Likewise, FEGLI proceeds do not follow TBE rules, since life insurance benefits typically pass directly to the named beneficiaries. Even for those benefits not subject to TBE, the principle of streamlined ownership transfer matters. If you or your spouse want to learn more about ways to protect retirement and other assets specific to federal employees, consider signing up for one of our free Federal Retirement Planning Workshops. These sessions are great opportunities to discuss estate planning strategies, including how TBE interacts with your federal benefits.
Incorporating Tenancy by Entirety into an Estate Plan
Holding your property as TBE can be a powerful component of an integrated estate plan. However, TBE alone may not address every scenario, especially in cases where your estate includes multiple real properties, significant personal property, or large investment portfolios. For federal employees who have carefully built up retirement and survivor benefits through FERS, TSP, or military pensions, striking the right balance among wills, trusts, and beneficiary designations is crucial.
If you have TBE property but also wish to establish a living trust, proper coordination is key to avoid unintended conflicts. For instance, some couples opt to keep the family home titled TBE while transferring other assets into a shared trust. Be mindful of potential estate tax implications if your property is high in value. Though many couples are unlikely to exceed current federal estate tax thresholds, real estate values can balloon unpredictably over time.
A thoughtful estate plan ensures that your will, any trusts or powers of attorney, and TBE designations all complement—rather than contradict—one another. This synergy helps make certain that your surviving spouse maintains stable control and that your wishes are clear.
Action Steps & Professional Guidance
Deciding to hold property in tenancy by the entirety should not be a standalone choice. It often works best as part of a thorough review of your finances, your family’s circumstances, and your retirement timeline. For federal employees, this typically involves verifying your state’s recognition of TBE, examining how TBE would impact your estate plan, and identifying any potential conflicts with federal rules on pension and life insurance benefits.
Because TBE laws vary greatly among states, it’s wise to speak with a local real estate attorney about whether your specific assets are eligible and how you should transfer or retitle property. A financial advisor familiar with federal employee benefits can help you align TBE with your TSP beneficiary designations, FEGLI coverage, and your broader retirement income strategy. An estate planning attorney can then round out the plan by ensuring that all documents—from wills to trusts—harmonize with your TBE arrangement.
With so many moving parts, the best first step might be to gather more information about financial and legal strategies tailored to federal employees. If you’re ready to dig deeper, we invite you to sign up for one of our free Federal Retirement Planning Workshops. These workshops cover critical topics such as survivor benefits, tax planning, and property titling nuances for those in federal service.
Conclusion
Tenancy by the entirety provides a potent blend of survivorship rights, creditor protection, and clear marital unity—advantages that can be especially meaningful for those who have spent decades serving in federal positions and want to ensure their home remains secure for their spouse. Before finalizing any decisions, confirm that TBE is recognized in your state, check how it might influence (or be influenced by) your federal benefits, and coordinate your entire estate plan accordingly.
At PlanWell, our financial advisors hold the ChFEBC, CFP, and AIF designations, reflecting our commitment to understanding the complexities of federal benefits. Whether you’re just beginning to think about your retirement or are already enjoying your federal pension, TBE can be a valuable part of your estate planning strategy. With the right guidance and a clear understanding of your options, you and your spouse can enjoy the peace of mind that comes from knowing your marital property is secure—and your future is better protected.
