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Tenancy by the Entirety and the Duplicitous Husband

Cite: Eddy R. Smith, Tenancy by the Entirety and the Duplicitous Husband, TENN. B. J., August 2016.

Marriage is a matter of more worth
Than to be dealt in by attorneyship. — 1 Henry VI 5.5.50-1

Marriage is sacred in the eyes of Tennessee law, so much so that it has its own forms of property rights, including tenancy by the entirety (TBE), available only to spouses.[1] Among TBE’s unique characteristics is that it may not be severed unilaterally by one spouse (or one spouse’s creditors). The Tennessee Court of Appeals recently applied that principle in Estate of Fletcher, reaching a result that is both logical and equitable, but perhaps surprising to some.[2]

Something is rotten in this marriage. Spouses Nelda and Calvert Fletcher opened a checking account, titled “joint with rights of survivorship.”[3] The account agreement required only one spouse’s signature to make a withdrawal from the account. Mr. Fletcher, without Mrs. Fletcher’s knowledge, unilaterally withdrew some or all of the account and deposited it into a certificate of deposit (CD) titled solely to him. Mr. Fletcher died soon thereafter with a will that gave Mrs. Fletcher all of his tangible personal property, but gave the remainder of his estate to his children from a prior marriage.

Mrs. Fletcher sued, claiming that the CD should have passed to her at Mr. Fletcher’s death because the CD was purchased with money taken from a joint marital account. The trial court held that the funds ceased to be jointly owned when Mr. Fletcher withdrew them and, accordingly, belonged to his estate. Mrs. Fletcher appealed.

The law hath not been dead, though it hath slept. Prior Tennessee law was unsettled on this issue. In 1951, the Tennessee Supreme Court, while not being called upon to decide whether money withdrawn from a tenancy by the entirety account remained entireties property, quoted favorably a Pennsylvania Supreme Court case that held as follows (the “Madden rule”):

Where a deposit is made payable to either spouse, agency or authority exists by implication, and the husband or the wife may, from that authority, withdraw the entire account, but the money thus withdrawn is impressed with the entirety provision that it is the property of both, and anyone dealing with such property as severalty, knowing it belongs to both, must submit to the consequences.[4]

In 1978, the Tennessee Court of Appeals stated that a tenancy by the entirety is terminated only when “both [spouses] convey, when one spouse dies and the survivor becomes owner of the whole, or when the survivorship is dissolved by divorce and the parties become tenants in common in the property.”[5]

Despite these prior cases, in 1992 the Tennessee Court of Appeals concluded that one spouse’s withdrawal of funds from a joint account eliminated the entireties nature of the money withdrawn (the “Mays rule”).[6] Although never explicitly overturned, Mays was questioned in 1998 by the Tennessee Supreme Court (Grahl) and again in 2008 by the Tennessee Court of Appeals (Grass).[7]

The trial court in Fletcher relied on the Mays rule, but the Court of Appeals overruled, explicitly rejecting “the principle from Mays that entireties ownership ceases when one spouse withdraws money from a marital account and reduces those funds to his or her separate possession.” Instead, the court explicitly adopted the Madden rule, finding that “the funds withdrawn should remain impressed with an entirety provision,” and (quoting from Grass) “anyone who receives the property knowing it is impressed with an entirety provision takes subject to the provision.” Further:

[A]bsent evidence of some agreement by the non-withdrawing spouse that his or her interest in the funds is to cease, we fail to see how one spouse’s withdrawal of money from a martial [sic] bank account could effectively destroy the entireties character of the funds…. Nor should account agreements like the one at issue, which provides either spouse with the right to withdraw funds, be generally construed as evidencing advance consent that either spouse may terminate entireties ownership through a unilateral withdrawal.[8]

Because Mr. Fletcher withdrew the money unilaterally without Mrs. Fletcher’s knowledge or approval, he did so as an agent of the tenancy by the entireties and the withdrawn money remained entireties property. Further, because Mr. Fletcher was aware that the funds were impressed with an entirety provision, the CDs were subject to the provision as well. Mrs. Fletcher never waived any claim of ownership in the disputed funds. Because the funds were entireties property at Mr. Fletcher’s death, they belonged solely to Mrs. Fletcher after Mr. Fletcher’s death.

How will this affect various parties claiming rights in assets?

Is this the right result?

Spouses. This result appears equitable as between spouses when one spouse acts without the other spouse’s knowledge. This is akin to the outcome when one spouse raids marital accounts immediately prior to a divorce. The courts will not allow one spouse to take the property interests of the other.

The opinion does not make clear whether the property was TBE because it resulted from joint borrowing or because it was presumed so upon deposit into a joint account, absent express language otherwise.[9] Would the result have been different if the joint account had been funded with Mr. Fletcher’s separate property? It appears the result would have been different had Mrs. Fletcher approved or joined in the transfer to Mr. Fletcher’s accounts, and perhaps if she had been aware and acquiesced for a significant period of time. What if proof showed that, upon the advice of a 22-year-old teller on the job three days, Mr. Fletcher’s separate assets were deposited in an account titled jointly?

Financial institutions. Does this result create risk for banks? Are banks now required to trace TBE proceeds or otherwise divine whether funds are impressed by TBE rights?

Estate and Trust Fiduciaries and Beneficiaries. May executors, trustees and beneficiaries rely on separate titling of property? Will we now have litigation regarding separately titled assets that once were TBE property?

Creditors. What effects does this opinion have on creditors? Could a creditor of Mr. Fletcher have sought to satisfy a judgment against Mr. Fletcher by pursuing the CD, or would the CD have enjoyed TBE creditor protection? Under Avenell v. Gibson and Tenn. Code Ann. § 45-2-703, banks are to honor a claim by a creditor of one spouse, but the other spouse may sue the creditor and claim superior TBE rights.

Powers of Attorney. What would be the result if one spouse, acting for himself and for his spouse pursuant to his spouse’s financial power of attorney, transferred TBE property to an account in his name alone? Such a maneuver can have a legitimate estate planning purpose.

Conclusion. Perhaps the simplest understanding and application of this opinion is that in certain circumstances it creates a right in a spouse to claim former TBE funds, but does not affect third parties who are unaware of the history, allowing them to rely on the separate titling unless and until a spouse interjects. Banks holding separately titled accounts should be able to allow the separate owner to act upon the account, fiduciaries should be able to act regarding estate assets, and creditors should be able to pursue separately titled assets, but a spouse might be able to intervene and demonstrate that the asset really belongs to the spouse or to the entirety. Time may tell whether this reading is correct.


  1. Also known as “tenancy by the entireties,” distinguished from joint tenancy with right of survivorship and tenancy in common. Other property ownership structures reserved for the marriage context include marital property, Tennessee community property trusts under Code Ann. §§35-17-101 et seq., and marital asset protection trusts or tenancy by the entireties trusts under Tenn. Code Ann. §§35-15-510.
  2. In re Estate of Fletcher, M2015-01297-COA-R3-CV, Filed May 23, 2016 (Tenn.Ct.App. 2016).
  3. The account was titled “joint with rights of survivorship,” but the opinion states “there is no dispute that the funds deposited within this account were held … as tenants by the entirety.”Id., at *6.
  4. Sloan v. Jones, 241 S.W.2d 506 (Tenn. 1951), quotingMadden v. Gosztonyi Sav. & Trust Co., 200 A. 624, 630 (Pa. 1938).
  5. White v. Watson, 571 S.W.2d 493, 495 (Tenn. Ct. App. 1978).
  6. Mays v. Brighton Bank,832 S.W.2d 347 (Tenn. Ct. App. 1992).
  7. Grahl v. Davis, 971 S.W.2d 373 (Tenn. 1998);In re Estate of Grass, 2008 WL 2343068 (Tenn. Ct. App. June 4, 2008).
  8. In re Estate of Fletcher, at *13.
  9. A signature card that designates a spousal account “joint with rights of survivorship” might be insufficient to overcome a presumption of TBE ownership. “[T]he law is well established ‘that words of a conveyance or legal instrument which would make two other persons joint tenants under the common law or tenants in common under [what is now Code Ann. §66-1-107], will create tenancy by the entirety in a husband and wife.’” Avenell v. Gibson, No. E2004-01620-COA-R3-CV (Tenn.Ct.App. 2005). Query, whether the result is different if the signature card offers “tenancy by the entirety” but the couple instead chooses “joint with right of survivorship?”


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