Tenancy by the Entireties exemption for Married Couples Holds - Case Law Update

The Missouri Court of Appeals for the Southern District of Missouri has just recently upheld the Missouri exemption (protection from creditors) for Tenancy by the Entirety for jointly owned property by married couples.

Tenancy by the Entireties is a special form of property ownership that Missouri, and some other states, reserved for married couples only. Tenancy by the Entireties means that a husband and wife own property as one person, and each of them owns a 100% interest in the property. This is different than co-tenancy, where each owner only owns their respective interest in the property (such as when two unmarried people own property – they each own only their half).

It is presumed that jointly owned property by married couples is tenancy by the entirety, and the presumption can only be rebutted by evidence that there was consent, agreement, or acquiescence that the property was not owned in this way. Tenancy by the Entirety property is fully exempt from creditors of one spouse, and is exempt in bankruptcy provided that only one spouse is filing. If both spouses file bankruptcy, the exemption does not apply, and if a creditor trying to collect a judgment is a creditor of both spouses, the exemption does not apply.

In the recent ruling, a creditor had obtained a judgment in another state, registered it in Missouri, and attempted to collect the debt by seizing assets (known as execution) that were jointly owned by a married couple. The Court held that, even though there was some evidence that the property was only owned by one spouse, it was not enough to rebut the presumption of tenancy by the entirety, and the property was exempt from collection.

To read the full opinion click here.