In the recent case of  Jimenez v. Jimenez, N.J. Super. App. Div.(MAY 8, 2018) (approved for publication), the NJ Superior Court, Appellate Division rebuffed the efforts of a creditor to force the sale of a home owned by the debtor and his spouse as tenants by the entireties. Relying upon a New Jersey statute, the Court held that the legislature has prohibited spouses from severing their tenancy without the written consent of the other spouse, and therefore, the creditor of one spouse may not force such a severance in order to satisfy the debt. The statute is NJ Rev Stat § 46:3-17.4 (2013), which says: “Neither spouse may sever, alienate, or otherwise affect their interest in the tenancy by entirety during the marriage or upon separation without the written consent of both spouses. ” Before that statute was adopted in 2013, the Courts had discretion as an equitable matter to order a partition under certain circumstances. Newman v. Chase, 70 N.J. 254, 262 (1976).  The Jimenez Court did make a cautionary point: “That said, we do not preclude a remedy by a creditor against Property held by tenants by the entirety when the title was deeded as a fraudulent conveyance in order to avoid known debts to creditors.”

What is Tenancy by the entireties? This  is a form of real property ownership reserved for lawfully married couples. The Deed normally uses language such as “X and Y, husband and wife,” or “X, married and Y his wife,” or perhaps “X and Y, wife and wife.” It must designate the marital relationship. In New Jersey, a couple who reside together but are not married cannot own property by the entireties. They may own the property jointly with survivorship, or they may own it together as “tenants in common” without survivorship. If the property is owned by a Married Couple by the entireties, then they each own 100% of all rights in the property, as neither spouse can transfer his/her interest without consent of the other spouse.  State law presumes that if a married couple acquire property, it is held by the entireties unless the Deed expressly states that they have a different form of ownership.

There are times that a married couple will choose to “sever” their ownership by transferring the property from entireties to tenants in common. However, all angles should be considered, since certain creditor protections could be lost while other objectives are accomplished.

Call for advice about senior care planning and property transfers ……… 732-382-6070

 A post by Linda Ershow-Levenberg, Esq. for Fink Rosner Ershow-Levenberg Blog.

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