When Laura and Louis moved from California to Florida, they came to see me about updating their Revocable Trust, Durable Power of Attorney, and related estate planning documents. During the process, we discussed distinctions between California law and Florida law, and we also reviewed their asset holdings. One of their largest assets was a $4 million taxable investment account titled jointly as husband and wife. We had a productive meeting, and as we were wrapping up, Louis said they needed my advice on one more thing. “Laura was in a car accident a few months ago. She’s alright, but it looks like she may have been partially at fault. Are we protected? Specifically, is the $4 million account protected?” “That depends,” I said. “Whose name is on the car she was driving?” “It’s in both of our names,” Laura replied. “That’s unfortunate,” I continued, “Because that means the $4 million account is totally exposed.” Fortunately, Laura and Louis settled the personal injury claim with the other driver within their auto insurance policy limits and never were pressed to disclose the existence of the $4 million account. But boy, did they lose sleep over it in the meantime. Why did I tell Louis and Laura that the joint account was exposed to liability arising from the auto accident? Would my answer have been different had the car been titled in Laura’s name only? Absolutely, and here’s why.

Tenancy by the Entireties

In a previous blog (Safeguarding Your Assets), I explained that generally, married Florida residents enjoy a special type of creditor protection known as “tenancy by the entireties” (or “TBE” for short). Essentially, assets titled as TBE are exempt from a creditor who has a claim against only one spouse. For example, a creditor with a judgment against only the wife cannot attach TBE assets of both the husband and the wife. To qualify as TBE property, generally the asset must be titled in the name of both spouses jointly. You will not find a reference to TBE protection in the Florida Constitution or the Florida Statutes; that’s because TBE protection emanates from common law, specifically the Florida Supreme Court case of Beal Bank, SSB v. Almand & Associates, 780 So. 2d 45 (Fla. 2001). But what if a creditor has a claim against both spouses? The simple answer is that TBE does nothing to protect spouses against a joint creditor, which is why I asked Louis and Laura whose names were on the title to the car Laura was driving when she had the accident. If Laura had answered that the car was in her name only, then I would have assured the couple that the joint account was safe and sound (assuming all of the requirements of TBE otherwise were met).¹ Although the result may seem unfair, Florida law is clear on the liability of co-owners of a vehicle, even where one co-owner had no involvement in the accident. In the 2014 case of Christensen v. Bowen, the Florida Supreme Court ruled that joint owners of a vehicle share liability in the event of an accident, even if one owner is not directly involved in the accident. In determining who should be responsible when only one of two owners is involved in a fatal accident, the Court emphasized the importance of ownership, rather than the driver’s actions. If you take away nothing else from this article, please remember this rule of thumb: only your name should be on the title to your primary vehicle, and only your spouse’s name should be on the title to his or her primary vehicle. Fortunately, if you own your automobiles free and clear, removing your spouse from the title to your vehicle only costs you about $90.00 and an afternoon at the DMV. If you do not own your vehicles free and clear, you will need to wait until your loan is paid in full to make any changes to the title. If you are currently stuck in a leasehold or installment sale with both spouses’ names on the title, consider purchasing an umbrella liability policy to ensure that your TBE assets are protected if your spouse is involved in an accident. Remember this rule of thumb when you buy or lease your next vehicle to ensure proper titling from inception.

Estate Planning Process

Discussing asset titles is an important part of the estate planning process. While TBE is a useful mechanism to protect spouses from potential creditor claims, it is not bulletproof, as demonstrated by the Louis and Laura example, above, as well as the Christensen case. A seasoned estate planning attorney will examine the title of each of your assets and discuss areas of potential liability exposure based on your unique circumstances and lifestyle. For more on asset protection, please read my blog Safeguarding Your Assets, as well as other useful articles which can be found on our firm’s website: St. Pete Law Group.

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