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Bank Accounts: Tenancy by the Entirety v. Joint Tenancy with Right of Survivorship

Written by Anya Kudszus • February 23rd, 2012

Probate Litigation,  

Whether or not a married couple establishes a bank account as a tenancy by the entirety account or as a joint tenancy with right of survivorship account is critically important, as demonstrated by Wexler v. Rich,--So.3d--, No. 4D10-4437 (Fla. 4th DCA February 22, 2012).

Under Florida law, if a bank account is a tenancy by the entirety account, one spouse may not transfer money from the account without the consent of the other spouse. Beal Bank, SSB v. Almand & Assocs., 780 So. 2d 45, 53 n.8 (Fla. 2001). If a bank account is joint tenancy with right of survivorship, either joint owner can transfer funds out, and a “joint owner’s withdrawal of funds from a joint bank account terminates the ‘joint tenancy nature of the [funds] and severs the right of survivorship as to the funds withdrawn.” Sitomer v. Orlan, 660 So. 2d 1111, 1114 (Fla. 4th DCA 1995).

In Wexler v. Rich, Donald Rich (deceased) opened two bank accounts in his name. Several months later, both accounts were converted into multi-party accounts with his spouse, Miriam. The bank’s forms to open the new accounts contained options for “Ownership of Account,” two of which were “Multiple-Party Account” and “Multiple-Party Account – Tenancy by the Entireties.” The bank employee assisting Miriam and Donald checked the “Multiple-Party Account” option, and selected “Multiple-Party Account with Right of Survivorship” for the beneficiary designation. The bank employee selected the “Multiple-Party Account” option because Miriam and Donald did not request a tenancy by the entireties account. The bank employee did not discuss a tenancy by entireties form of ownership with Miriam and Donald. Miriam and Donald reviewed the agreements with the bank employee for accuracy and then each signed each form at the bottom. 

After the new accounts were established, Donald took the money from the two accounts and put it into a new account in Donald’s name alone. Donald then transferred ownership of the new account into the name of his revocable trust. After Donald’s death, Miriam insisted that she was entitled to the funds from the two accounts jointly titled with her deceased husband. The Florida probate court agreed with her, as summed up by the appellate court’s opinion:

Relying on Beal Bank, SSB v. Almand & Assocs., 780 So. 2d 45 (Fla. 2001), the circuit judge held that Miriam was entitled to recover $210,956.10, because the Bank United accounts were tenancies by the entirety, entitling Miriam to assert a claim over the funds in the possession of the revocable trust. The trial judge found that there was “no express disclaimer of the tenancy by the entirety designation” under Beal Bank, because “there was no discussion of options, no mention of the choices one would have when opening this account and no initials placed next to the form of ownership selected” by Miriam and Rich “to express what they knowingly intended.”

The appellate court disagreed and reversed the Florida probate court.  First, relying on Beal Bank, the appellate court found that Miriam and Donald expressly disclaimed the tenancy by the entireties account status. The Florida Supreme Court in Beal Bank has identified two ways of disclaiming a tenancy by the entireties account status, one being an express statement that tenancy by the entireties was not intended, and two being:

[I]f the financial institution affirmatively provides the depositors with the option on the signature card to select a tenancy by the entireties among other options, and the depositors expressly select another form of ownership option of either a joint tenancy with right of survivorship or a tenancy in common.

Miriam and Donald disclaimed the tenancy by entireties account status in the second express way, because the account opening document provided by the bank contained the option of tenancy by the entireties, but Miriam and Donald expressly chose another option.

Second, the appellate court found that the bank employee had no duty to discuss or explain account ownership options with Miriam and her husband, stating that: “Only a handful of attorneys in Florida are able to describe the differences between a tenancy by the entireties bank account and a joint account with right of survivorship.” The bank only had to provide the account ownership options, not the explanation or assistance to make a considered choice.

The key point to take away from Wexler v. Rich is that if you and your spouse are creating a joint account, make sure you are informed about the difference between a tenancy by the entireties account and a joint tenancy with right of survivorship account.  The bank does not have to explain it or even discuss the difference between the types of accounts with you.  The Florida probate court will look to the account opening card to determine the nature of the account. The account opening form determined Miriam’s fate, because the Miriam and Donald were provided the option of choosing to establish a tenancy by the entireties account, but expressly selected another option. If a tenancy by the entireties option had not been provided on the account opening form, a presumption would have arisen that the bank account was held as a tenancy by the entireties account.

The appellate court also commented on the applicability of an amendment to Florida Statute section 655.79(1) (2009), which became effective on October 1, 2008. The 2008 amendment provides that “[a]ny deposit or account made in the name of two persons who are husband and wife shall be considered a tenancy by the entirety unless otherwise specified in writing.” Although the application of section 655.79(1) was not argued in Wexler, the appellate court noted that if section 655.79(1) were to apply, the:

[S]igned account agreements containing the option of a tenancy by the entireties and designating the accounts as “Multiple-Party Account[s] with Right of Survivorship” would satisfy the statutory requirement that an alternative form of account ownership be ‘specified in writing.’