Tenants By Entirety - TBE

Here’s a little ditty about Jack and Diane, two American kids who grow up, get married, and buy a house in the ‘burbs. Their state is a TBE state, which means that, when one of them heads off to that great bluegrass festival in the sky, their ownership rights to that house automatically transfer to the surviving spouse. They don’t get put into a trust or attached to an estate or anything like that. That’s because “TBE” stands for “tenants by entirety,” and “tenants by entirety” means that the property in question is owned jointly and indivisibly by those two people. It’s how most states tend to handle property owned by married folk, and it’s super similar to what we might have heard called “community property” laws.

This means that, among other things, Jack can’t sell the house without Diane signing off on the transaction. It also means that if Diane goes bonkers one month and maxes out all of her credit cards, defaults on a personal loan, and randomly stops paying her bills, creditors can’t come after the house she owns with Jack as a way to recoup their debts. They can come after her personal finances and assets all day, but since the house is jointly and indivisibly owned with Jack, they can’t touch it. Of course, if Jack decides he’s had enough of Diane’s shenanigans and they get divorced, the TBE thing ceases to be a thing, and at that point, the creditors can indeed come after Diane’s portion of the house.