How Tenancy By the Entirety Works in Pennsylvania

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Owning property with a spouse in Pennsylvania comes with specific legal benefits, especially under tenancy by the entirety. This form of ownership is available only to married couples and offers protection from each spouse’s individual creditors. If you live in the Keystone State, knowing how tenancy by the entirety works is important for estate planning, real estate transactions and financial decision-making.

Working with a financial advisor can help you determine how tenancy by the entirety suits your estate planning and asset protection goals.

Tenancy by the entirety is a type of joint property ownership available only to married couples. This legal arrangement treats the couple as a single entity in terms of ownership, meaning both spouses share equal, undivided interest in the property.

This ownership model offers significant protections. For example, if one spouse accumulates personal debt, creditors usually cannot put a lien on the property unless both spouses are responsible for the debt. This protection is specific to tenancy by the entirety and is not available in other forms of joint ownership.

In Pennsylvania, tenancy by the entirety offers legal protections that shield spouses from each other’s individual financial liabilities and guarantee a smooth transfer of property ownership after one spouse’s death.

Right of survivorship: Upon the death of one spouse, the surviving spouse automatically becomes the sole owner of the property without needing to go through probate. This feature simplifies estate planning and maintains continuity of ownership.
Creditor protections: If one spouse accrues personal debt, creditors cannot force the sale of the property unless both spouses are jointly responsible for the debt. This makes tenancy by the entirety an attractive option for asset protection.
Equal ownership and consent: Neither spouse can sell, transfer, or encumber the property without the other’s agreement, giving both parties equal control over major property decisions.

A woman researching when tenancy by the entirety can be canceled.

While tenancy by the entirety provides strong protections, it can be terminated under specific circumstances:

Divorce: In Pennsylvania, tenancy by the entirety automatically converts into a tenancy in common upon divorce. This means each former spouse owns an equal but separate share of the property and can sell or transfer their portion independently.
Mutual agreement: If both spouses agree to dissolve tenancy by the entirety, they can transfer ownership into another form, such as joint tenancy or tenancy in common. This typically requires signing a deed that reflects the new ownership arrangement.
Selling the property: If both spouses agree to sell the property, tenancy by the entirety naturally ends when the sale is completed, and proceeds are divided according to the agreed terms.
Legal judgment against both spouses: While individual creditors cannot place a lien on a property held under tenancy by the entirety, debts owed jointly by both spouses can lead to legal action that forces a sale.
Default payment: If a Pennsylvania couple jointly takes out a loan and defaults, a creditor may be able to enforce a judgment against the property, terminating the tenancy by the entirety.

While this ownership structure is typically associated with real estate, it may also apply to certain business assets, offering financial protection and continuity in ownership. Three general examples are:

Asset protection: If a business is structured so that real estate holdings are owned under tenancy by the entirety, personal creditors of one spouse cannot seize the property to satisfy individual debts.
Business continuity: If one spouse passes away, the surviving spouse automatically inherits full ownership of the business property, providing continuity without the need to go through probate.
Limitations in business operations: One potential drawback is that both spouses must agree on major financial or business decisions regarding jointly owned assets. If one spouse wants to sell or restructure the business, they need the other’s consent.

Married couples in Pennsylvania can use tenancy by entirety to protect their property. It requires the consent of both partners for any sale or transfer, provides creditor protection and allows ownership to pass to the surviving spouse without the need for probate. However, you should be aware of its limits, which restricts one spouse’s ability to act independently without the other, as well as restrictions on transferring or encumbering the property unless both parties agree.

A financial advisor can work with you to create an estate plan for different needs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
While you may be tempted to save some money by planning your own estate, you should still be careful with these DIY estate planning pitfalls.

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