Tenancy By The Entireties: What It Means For Married Couples’ Bank Accounts
Wednesday, December 13th, 2017
You and your spouse have a joint bank account, and you know that the joint account is shared marital property. But what happens to assets withdrawn from the joint account that are deposited into a separate account?
In a recent Tennessee Supreme Court decision, the Court answered this question.
A husband and his second wife deposited a little more than $100,000.00 into a marital joint bank account. The Court noted the account was owned by the couple as “tenants by the entirety,” a specific designation for assets held by married couples. According to the terms of their account, either spouse was able to make withdrawals without the signature of the other. A little less than a year later, the husband withdrew nearly the entire account, $100,000.00, and placed the funds into a certificate of deposit (CD) in the husband’s name only. The husband became ill and passed away one year later.
In his will, the husband left his personal property to the second wife and left his other assets, including the CD, to his children from the previous marriage. The second wife asserted that she should receive the CD because it was created with marital funds. The Court disagreed and determined that the CD descended to his children from a previous marriage.
In deciding this case, the Tennessee Supreme Court adopted a definitive rule: if one spouse withdraws funds from a joint bank account held as tenants by the entirety, the funds are no longer owned by the married couple and are separate assets.
As a final note, the Court limited to this rule to situations where the spouses do not attempt to deceive each other, hide funds from each other, or avoid creditors.
This case raises many implications for estate planning and family law, and it shows that it is crucial to have a clear estate plan with your spouse. Interested in creating an estate plan, or changing your current plan? Give our attorneys a call.