Property Held as "Tenants by the Entirety"

In Michigan, the concept of "tenants by the entirety" refers to a form of joint property ownership that is available only to married couples. This type of ownership has unique implications when it comes to protection against creditor claims and is crucial to consider while estate planning. A tenancy by the entirety also gives spouses survivorship rights — and keeps the property out of the public probate process after one of the spouses passes away, allowing the surviving spouse to take ownership immediately.

What Can Be Owned as Tenants by the Entirety?

There are many different types of property that can be owned as tenants by the entirety under Michigan law. This form of ownership can apply to both real property and personal property. Specifically, the following types of assets are examples of what can be owned as tenants by the entirety in Michigan:

• Real estate — Real estate may be titled to spouses as tenants by the entirety, including the marital home, vacation homes, and investment property..

• Promissory notes — A promissory note is a financial instrument in which one party promises to pay a certain amount of money to another party at a future date or on demand. A promissory note may be made payable to spouses as tenants by the entirety.

• Corporation stock certificates — A stock certificate may be titled to spouses as tenants by the entirety.

• Membership Interest in an LLC — Membership interest in a limited liability company may be owned by spouses as tenants by the entirety.

In a tenancy by the entirety, each spouse has a right of survivorship. This means that each is presumed to own the entire property. Regardless of which type of property is titled as a tenancy by the entirety, neither spouse can sell or transfer their interest without the consent of the other. If the marriage ends in divorce, the tenancy by the entirety may be converted to a different form of ownership.

How Does Tenancy by the Entirety Offer Creditor Protection?

One of the main benefits of owning property as tenants by the entirety is the protection it offers from individual creditors. If one spouse has a debt that is solely theirs, creditors cannot place a lien on or attach the property owned as tenancy by the entirety to satisfy that debt. Only if both spouses are jointly liable for a debt are creditors able to reach property owned as tenants by the entirety.

How is a Tenancy by the Entirety Used in Estate Planning?

Owning property as tenants by the entirety can be a useful estate planning tool, providing automatic transfer to the surviving spouse, in addition to the protection from individual creditor claims it offers. This form of ownership permits spouses to own property as one legal entity. When a tenancy by the entirety is used, a surviving spouse can avoid the lengthy and costly probate process to receive the property.

Contact an Experienced Michigan Estate Planning Attorney

If you are thinking about estate planning, a tenancy by the entirety can be an essential tool to help ensure your property is easily transferred to your spouse. With offices in East Lansing, Mt. Pleasant, Grand Rapids, and Detroit, The Gallagher Law Firm offers professional services for a broad scope of estate planning matters. To learn more about how we can assist you, contact us online, call (517) 853-1515 or email bpg@thegallagherlawfirm.com.