Tenancy by the entirety can protect your home

May 15, 2012
Joel M. Blau, CFP

Mr. Blau is chief executive officer of MEDIQUS Asset Advisors, Inc., in Chicago. He can be reached at 800-883-8555 or blau@medquis.com.

,
Ronald J. Paprocki, JD, CFP, CHBC

Mr. Paprocki is chief executive officer of MEDIQUS Asset Advisors, Inc. in Chicago.

Holding property in joint tenancy with rights of survivorship (JTWROS) generally provides no asset protection. In fact, JTWROS ownership exposes the property to the creditors of each of the joint tenants.

Key Points

Q. I own my home jointly with my wife. Does that mean my home is protected in the event I’m sued?

TBE is routinely employed when both spouses are at risk of personal liability as a result of their professions. In instances where only one spouse is at risk, married individuals may transfer real estate and other assets to the spouse not at risk. Through the creation of a particular type of marital trust, the spouse's estate plan can provide for the residence to pass to a trust that will, in large part, protect the asset from the survivor's creditors.

It is important to note the potential temporary nature of TBE. Divorce dissolves it. The death of a spouse will have a similar result, with the creditors of the surviving spouse being able to reach the property. This loss of protection from creditors comes from the fact that the foundation of TBE is a valid marriage. Therefore, whatever destroys a valid marriage will destroy TBE. Probate will be avoided with TBE. The interest will automatically vest in the surviving spouse by rule of law outside of the probate court. TBE is lost by the death, and the surviving spouse will face probate for the properties previously held in tenancy by the entireties.

Q. I haven't found the time to do any estate planning. What happens if I die before I have a will completed?

A For those who die without a valid will, the intestacy laws apply. Most states follow the Uniform Probate Code, which generally provides for the distribution as follows:

Remember, intestacy laws only apply to assets that are not jointly titled or have a beneficiary designation.

Joel M. Blau, CFP, (top) is president and Ronald J. Paprocki, JD, CFP, CHBC, is chief executive officer of MEDIQUS Asset Advisors, Inc. in Chicago. They can be reached at 800-883-8555 or blau@mediqus.com
or paprocki@mediqus.com
.

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