The Tennessee Supreme Court released an opinion on December 6, 2017 that has several implications on estate planning for married individuals. A married couple can own property as tenants by the entirety. See Bryant v. Bryant, 522 S.W.3d 392, 400 (Tenn. 2017); Tenn. Code Ann. § 36-3-505, 31-1-108. Tenancy by the entirety is only available to married persons. Grahl v. Davis, 971 S.W.2d 373, 378 (Tenn. 1998). Real and personal property can be held as tenancy by the entirety. What makes holding property by tenancy by the entirety special is that each spouse holds an interest in the whole property as opposed to an interest in undivided parts. Bryant, 522 S.W.3d at 400-01. Upon the death of a spouse, tenancy by the entirety property passes to the surviving spouse outside of the deceased spouse’s estate. This is incredibly important from an estate planning perspective.
This distinction is also important when dealing with real property because one spouse cannot unilaterally transfer his or her interest in the real property (when held as tenancy by the entirety) because it destroys the other spouse’s ownership interest. Bryant, 522 S.W.3d at 401. As the Tennessee Supreme Court decided yesterday, personal property, specifically joint bank accounts, is different. In Re Estate of Calvert Hugh Fletcher, __ S.W.3d __, No. M2015-01297-SC-R11-CV (Tenn. 2017)(hereinafter Fletcher); Tenn. Code Ann. § 45-2-703(c).
In Fletcher, the husband and wife owned a house as tenancy by the entirety. They sold the house and deposited the proceeds into a bank account designated “JOINT – WITH SURVIVORSHIP (and not as tenants in common).” The couple also deposited other marital funds in the joint account. A joint bank account held by a husband and wife is presumed to be tenancy by the entirety property unless there is contradictory proof. Grahl, 971 S.W.2d at 378. The account cards do not have to use the words “joint” or “tenants by the entirety” for this presumption to arise. Griffin v. Prince, 632 S.W.2d 532, 536 (Tenn. 1982).
The joint account did not require both Husband and Wife’s signatures to withdraw funds, only one spouse’s signature was needed. The husband withdrew funds from the joint account and placed them in a certificate of deposit solely in his name. Wife was not a beneficiary of the certificate of deposit. The husband died and had children from a previous marriage.
Here is where Fletcher becomes important. Tennessee courts have been inconsistent in deciding whether money in a tenancy by the entirety account remains tenancy property after withdrawal. There are several opinions that have decided the issue both ways based on different legal reasoning. However, Fletcher ultimately held that once money is withdrawn from a tenancy by the entirety account by one spouse, the property ceases to be entirety property. Therefore, in Fletcher, the certificate of deposit passed to husband’s estate because the right of survivorship severed when Husband withdrew the funds from the joint account. If the Supreme Court had held money in a tenancy by the entirety account continued as entirety property after withdrawal, the right of survivorship would have remained and the certificate of deposit would have passed to wife outside of the Husband’s estate.
Here are the sour grapes for Wife. Husband’s will directed tangible personal property to Wife, which does not capture the certificate of deposit. The residuary, which does capture the certificate of deposit, was left to Husband’s four children from a previous marriage. So the proceeds from the marital home and the other marital money placed in the original joint account will ultimately end up in Wife’s stepchildren’s hands. Fletcher is a great example of why individuals should have a trusted attorney help them with estate planning and for individuals to consult an attorney to determine how best to hold their property.
 Property held as tenants in common does not have the right of survivorship and it does not require the parties to be married.