Marital bank accounts as entireties property: what is the current state of Florida law?

• Author: Sorensen, Henry T., II

What Is the Current State of Florida Law?

Recent cases indicate that lower courts are at odds with certain theories underlying TBE principles, and have registered opinions from one end of the spectrum to the other.

Florida courts have long recognized that marital bank accounts may be held in a tenancy by the entireties (TBE).[1] However, the Fifth District's recent decision in Beal Bank, SSB. v. Almand & Assoc., 710 So. 2d 608 (Fla. 5th DCA 1998), demonstrates the uncertainty with which courts apply the principles underlying the TBE doctrine. In a severely fractured opinion, the three-judge panel wrote a one-paragraph per curiam opinion affirming the trial court, and each judge wrote a separate concurring or concurring and dissenting opinion. The individual opinions appeared to take diametrically opposed views on the exact same accounts. Other recent Florida cases indicate that lower courts are substantially at odds with certain theories underlying TBE principles, and have registered opinions from one end of the spectrum to the other on bank accounts that appear to be identical.

TBE and Marital Accounts Generally

To establish a TBE estate in any realty or personalty, the four unities of time, title, interest, and possession plus the element of marriage must be present.[2] Florida banks vary as to whether they will open a TBE account.[3] Unlike Florida realty in which a TBE is presumed,[4] there is no presumption that husband and wife automatically hold property in a TBE manner when the language of the bank account does not identify any particular ownership status. Even assuming that the four unities and marriage are present before establishing the account, most Florida courts also require the depositors to demonstrate an intent to hold the account in a TBE status.[5]

Because most Florida banks do not include TBE language on the depositors' signature card, or fail to recognize the account ownership status entirely, the intent requirement has generated much post-judgment and bankruptcy litigation. The proofs required by various Florida courts are amorphous and inconsistent. Borrowers, lenders, and lower courts are in need of intervention by the Florida Supreme Court or the Florida Legislature so that everyone will more readily discern what accounts may be subject to the reach of creditors.[6]

The Beal Bank Case

Beal Bank provides a good foundation from which to explore the TBE issues. Unfortunately, none of the four opinions clearly set forth the facts as found by the trial court. From reviewing the parties' appellate briefs, we learned that nine separate accounts were at issue. The accounts and the accompanying language of the ownership status was as follows:

Financial Ownership Institution Language Barnett Bank[7] Amos Almand, Jr. and Doris Almand Compass Bank Amos Almand III, Sue Almand Compass Bank Amos Almand or Sue Almand Compass Bank Jane D. Freeman, Sandra N. Freeman, Amos F. Almand III and Sue C. Almand Compass Bank Amos Almand (Salary Account) Compass Bank Amos Almand, Jr. or Doris Almand Compass Bank Amos Almand, Jr. and Doris Almand South Trust Bank Amos Almand, Jr. and Doris Almand, JT TEN Merrill, Lynch[8] Amos Almand III and Sue Almand When both of the Almand husbands defaulted on mortgage and note obligations in connection with a construction project, Beal Bank obtained a foreclosure judgment and ultimately garnished these accounts.[9] The court issued a per curiam opinion finding that the Merrill, Lynch account was subject to execution,[10] and the salary account held by Compass Bank was not subject to execution.[11] The rest of the accounts were found to be TBE accounts, and, therefore, exempt from execution.

With respect to the remaining accounts, Judge Cobb's concurring and dissenting opinion focused on the husbands' testimony that their wives did not need consent to "withdraw the funds in any of the accounts for any purpose," even one totally unrelated to the marital unit.[12] Judge Cobb found significant that the husbands did not know the legal significance of a TBE account when those in the immediate case were established, and the wives did not testify as to the intent behind creating the accounts.[13] Based on these facts, he believed that the depositors did not meet their burden of demonstrating an intent to create TBE accounts. Accordingly, he dissented from the per curiam opinion and would have held none of the remaining accounts exempt. Beal Bank, 710 So. 2d at 612.

In contrast, Judge Harris stated that the Barnett deposit agreement governed the rights between the depositors and the bank only, and did not govern the depositors' rights vis-a-vis third party creditors.[14] He believed that the signature cards executed by the depositors on all accounts gave each spouse authority for their withdrawals,[15] and the testimony showed that the parties intended to create accounts "with the attributes" of a TBE estate.[16] These facts, along with the presence of the five unities, were enough for Judge Harris to believe that all of the accounts were held as a TBE. Judge Harris expressly noted that the parties did not have to know the legal significance of the estate when it was created, but that "the only intent necessary to be proved ... is the intent that each spouse owns the entire account and not a divisible portion thereof."[17]

Judge Sharp sided with Judge Harris on all accounts except for two. First, he held that the Barnett account was subject to execution because the deposit agreement expressly disclaimed that the account was held by the entireties.[18] Second, the SouthTrust account had the term "JT TEN" after the depositors' names, which convinced Judge Sharp that the parties did not intend to hold the funds in a TBE account.[19] He would not allow parol evidence of intent to support the creation of a TBE estate when these two accounts expressly repudiated that estate.[20] Judge Sharp also found telling the fact that the parties did not know what a tenancy by the entireties was when the accounts were created, nor did the parties discuss the issue with a representative from the respective banks.[21]

Burdens of Proof and Presumptions

In Beal Bank, each judge properly placed the burden on the Almands to prove their actual intent was to create a TBE estate in the accounts. Florida case law requires parties asserting a TBE estate in personalty to prove their intent from the facts and circumstances surrounding the transaction. The Florida Supreme Court, in First Nat. Bank v. Hector Supply Co., 254 So. 2d 777, 780 (Fla. 1971), noted...