Tenants by Entireties Protection at National Banks

People who are moving to Florida often want to examine the exemption of their previously acquired assets under Florida law. The status of previously opened joint bank accounts is particularly confusing for people relocating to Florida.

What Is Tenants by the Entirety?

Tenants by the entirety (TBE) is a form of joint property ownership available only to married couples. One of its primary characteristics is that each spouse has an undivided interest in the property. Under tenants by entireties law, creditors of one spouse cannot attach and sell the interest of the debtor spouse. Instead, both spouses are considered a single legal entity, meaning that creditors of one spouse cannot touch the property held as tenants by entiretiesunless both spouses are jointly in debt.

Can You Open a Tenants by Entireties Account at a National Bank?

The answer is yes. You can open a tenants by entireties account at a national bank. The bank account will be owned as tenants by entireties as long as the account was opened in Florida while you were Florida residents.

Moving to Florida

Consider the common situation where, prior to moving to Florida, a married couple open a joint bank account in their home state- for example, assume the couple resides in Georgia. Assume again that the account is at a national bank such as Chase or BOA. In Florida, a joint marital account is tenants by entireties property and the money is exempt from the creditors of either spouse individually. Georgia does not recognize the tenants by entireties form or property owner nor the exemption of marital property. Does the couple’s national bank account become exempt upon the couple’s Florida residency?

In researching this issue for a client I found a case that discussed the issue. The court said that state property law determines the characterization of marital bank accounts and other property. The applicable entireties law and exemptions are the laws of the state where the property is located and not the state where the debtor may reside.

For instance, a parcel of Florida real property jointly owned by married persons is entireties property, and exempt for one spouse, even if the property owners have no residence in Florida. The location of real property is clear: it is where it is. The physical location of a financial account is less clear.

If an account is located at a bank that has no branches outside Florida then the account is located in Florida and marital money in the account is exempt entireties property under Florida law. If, in our example, the bank was situated in Georiga and had no branches outside of Georgia then the money is Georgia property with no entireties protection even if the debtors move to Florida. This was the factual situation and result in the case mentioned above. The bank was located only within the prior state, and the debtors opened the account at a physical branch in the prior state.

But, what if the debtors had opened a bank account in Georgia at a national bank like Chase or BOA etc. One could assume that the account would be exempt upon moving to Florida because the national bank had branches in Florida. Most national banks have policies regarding the legal situs of accounts, and these policies are stated in the account agreement. The policy is that national banks consider the depositors account to be located at the branch where the account is opened. So, in the example, if a married couple opened a bank account at a Georgia branch of a national bank the money in the account would be Georgia property, and the account would not become an entireties account by virtue of the couples move to Florida..

In these facts, the couple should open a new bank account at a Florida branch of the same or a different national bank after declaring Florida residency in order to have a protected tenants by entirety account.