Bank Accounts and Tenancy By the Entirety

Marc P. Barmat
Furr and Cohen, P.A.
One Boca Place, Suite 337 West
2255 Glades RoadBoca Raton, FL 33431
mbarmat@furrcohen.com

In a recent unpublished opinion, Chief Bankruptcy Judge Paul G. Hyman, ruled on whether summary judgment was appropriate regarding the debtor’s claim of a tenancy by the entirety (“TBE”) exemption for two separate bank accounts. Each account was analyzed separately by the Court in In re: Michael F. Aranda, Case No. 08-26059-PGH (Adversary Proceeding No. 08-01768-PGH). A review of this case provides a good reminder of the TBE law and its applications to bank accounts.

Account 1 was opened by the debtor with a signature card that provided the following “check the box” options under the heading “Ownership of Account”: (1) “Single-Party Account”; (2) “Multiple-Party Account”; (3) “Multiple-Party-Account Tenancy by the Entireties”; and (4) “Trust-Separate Agreement.” The debtor checked the box next to the line indicating “Single-Party Account.” Subsequently, the debtor and his wife executed a second signature card adding the debtor’s wife to account 1 and checking the box indicating “Multiple-Party Account.”

Account 2 was opened at the same time as when the debtor executed a second signature card on account 1. On account 2, the debtor and his wife checked the box indicating “Multiple-Party Account.” The debtor and his spouse assert that the bank personnel selected the “Multiple-Party Account” box before presenting the signature cards to the debtor and his wife for their signature.

Following the execution of the new signature card on account 1 and the execution of the signature card on account 2, a judgment was entered against the debtor which led to service of a writ of garnishment on accounts 1 and 2. The debtor filed a Chapter 11, which was subsequently converted to a Chapter 7. The Chapter 7 trustee objected to the debtor’s exemption claim of tenancy by the entirety in the accounts.

With regard to account 1, Chief Judge Hyman ruled that the account could not be TBE as the debtor and his spouse did not meet one of the unities of TBE, i.e., the debtor and his spouse did not acquire their interest in account 1 at the same time. The six necessary unities of TBE ownership are: “(1) Unity of Possession (joint ownership and control); (2) Unity of Interest (the interests in the account must be identical); (3) Unity of Title (the interests must have originated in the same instrument); (4) Unity of Time (the interests must have commenced simultaneously); (5) Survivorship; and (6) Unity of Marriage (the parties must be married at the time the property became titled in their joint names).” Chief Judge Hyman agreed with the trustee’s argument that the unity of time was not present. The court ruled that the relevant time for establishing the unities of TBE ownership is when the debtor opened the account and that the subsequent addition of the debtor’s wife as co-owner was not sufficient to create a tenancy by the entirety. As a result, the Court denied the debtor’s claim of exemption in account 1.

With regard to account 2, the Court denied the trustee’s summary judgment as it could not determine the form of ownership based solely on the signature card. In accordance with the Florida Supreme Court’s decision in Beal Bank, SSB vs. Almand and Assocs., 780 So. 2d 45 (Fla. 2001), the Court found that if the debtor establishes that the bank expressly precluded TBE as a form of ownership, then a debtor may prove by extrinsic evidence that he intended to create a TBE even if the signature card contains an express disclaimer of TBE ownership. Accordingly, the court denied the trustee’s motion for summary judgment on the claim of exemption in account 2.

This article was submitted by Marc P. Barmat, Furr and Cohen, P.A., One Boca Place, Suite337 West, 2255 Glades Road, Boca Raton, FL 33431; mbarmat@furrcohen.com

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