Many married couples in Florida hold assets as tenancy by the entirety (TBE) because it offers strong protection: A creditor of only one spouse can’t touch the asset. However, that protection can disappear when the couple moves the property into a revocable trust, especially if they’re doing so to avoid probate or plan for incapacity. If the wrong steps are taken, the result can be loss of creditor protection, elective-share exposure, or even a fraudulent-transfer claim.
Florida recognizes TBE as a special form of ownership between spouses. But when that jointly owned TBE asset is moved into a revocable trust, particularly a joint trust, courts may say the TBE status is gone. That is because the trust itself isn’t a married couple.
Bankruptcy cases like In re Givans and In re Anderson make this point clear: Once TBE is broken, a creditor of one spouse might gain access.
Moving a TBE asset into a revocable trust doesn’t shield it from a surviving spouse’s elective share. Florida law allows a spouse to claim 30% of the elective estate, which includes trust assets, joint property, and more. If the plan tries to sidestep this, the surviving spouse (or their lawyer) may force trust beneficiaries to contribute.
Transferring assets into a trust while facing creditor pressure can raise red flags under Florida’s Uniform Fraudulent Transfer Act. Courts look for “badges of fraud,” like insider transfers, concealment, or signs of insolvency. Florida also punishes last-minute moves that try to convert non-exempt assets into exempt ones, including trusts, if creditors are already circling.
It is always best to plan early and thoughtfully rather than rush the funding of a trust during a time of crisis. In some cases, continued ownership of TBE assets with pour-over wills or post-death transfer, depending on tax considerations, is the better course of action. On other occasions, land trusts, or out-of-state trust situs laws, may provide protection.
At Schnauss Naugle Law, we assist couples in deciding what is most protective while accomplishing their long-term goals. Please call us at 904-643-6342 or complete the intake form for more information.
