Tenancy By the Entirety in South Carolina Explained
A tenancy by the entirety is a common way for married couples to hold property and have it easily pass from one spouse to the other upon one spouse’s death. South Carolina doesn’t recognize tenancies by the entirety, but there are planning steps you can take to get the same effect.
What is a Tenancy by the Entirety?
A tenancy by the entirety is a special way for spouses to hold property jointly. The key ideas are:
- Each spouse has a 50/50 interest.
- Both spouses must consent to any modification to the property interest. This means that one can’t sell their half without the other’s consent, and one can’t use their interest as collateral for a loan without the other’s consent.
- If one spouse dies, the property skips probate and transfers directly to the other.
- Creditors can’t make claims against the property except for joint debts.
Why Doesn’t South Carolina Recognize Tenancies by the Entirety?
Tenancies by the entirety are a special form of property ownership created by law in some states. They’re not necessarily outlawed in South Carolina. The state just doesn’t have this law on its books.
What Can You Use Instead of a Tenancy by the Entirety?
The most common substitute for a tenancy by the entirety is a joint tenancy with right of survivorship. In a joint tenancy, two or more people each hold an equal share of a property together. They can be related or unrelated, and all have the right to use the property.
The right of survivorship automatically transfers the property to the other tenant(s) on one tenant’s death. If the joint tenancy with right of survivorship is between spouses, one spouse would become the sole owner. If the ownership was split four ways and one person died, the surviving three owners would each now have a one-third share.
The main difference from a tenancy by the entirety is that each tenant can freely transfer their ownership interest in the property. This cancels the right of survivorship and creates a tenancy in common with the new tenant (purchaser, creditor, etc.). In addition, a creditor can win a judgment against one individual’s interest in the property and force a liquidation sale. This creates slightly less protection against individual debts than a tenancy by the entirety.
If you don’t want to lose value in your share of the property due to your spouse’s creditors or decision to sell their interest, you may wish to use a prenuptial agreement or another arrangement. Also, keep in mind that when both spouses are on the title of the house, one spouse generally can’t outright sell the entire home without the other’s consent, and most people won’t be interested in buying an interest in half a house where the other owner is refusing to sell their house.
What if You Moved from a Tenancy by the Entirety State to South Carolina?
If you move to South Carolina from a state that recognizes tenancies by the entirety, your estate would be resolved under South Carolina law. As a general rule, South Carolina will treat a tenancy by the entirety created in another state as a joint tenancy with right of survivorship. In many situations, there is no practical difference. However, to avoid unintended consequences or complications, you should adjust your estate plan to match South Carolina law as part of your routine updates.
Talk to a South Carolina Lawyer
If you’re trying to make heads or tales of your estate, your property, and how it all works together – ask Indigo Family Law how to best protect your assets and make sure your spouse is provided for if something happens to you. Contact us today!