Understanding the Problem
Tenancy by the entirety is a form of joint ownership available to married couples. Each spouse has rights in the whole property rather than a separate divisible share. The ownership form can transfer the property automatically to the surviving spouse, affect what children and other heirs receive, and protect the property from certain creditors while both spouses are living.
Apply the Law
Key Requirements
The spouses must be married when the tenancy is created, and the conveyance must qualify under North Carolina law. The deed should be reviewed to confirm that it created a tenancy by the entirety and did not express a contrary form of ownership. The tenancy must also remain in effect until death; for example, divorce, a joint conveyance, or another terminating event can change the ownership form.
What the Statutes Say
N.C. Gen. Stat. § 41-56 governs the creation of tenancy by the entirety and generally provides that a conveyance of real property to spouses creates this form of ownership unless the conveyance expresses a contrary intention. Under N.C. Gen. Stat. § 41-64, the property belongs to the surviving spouse by virtue of survivorship when the other spouse dies, and the deceased spouse has no estate in the property that is descendable or devisable.
N.C. Gen. Stat. § 41-60 also provides that, before the tenancy terminates, the property generally is not liable for either spouse’s individual debts and a judgment lien against one spouse alone does not attach to it. The property remains liable for joint obligations of both spouses.
Analysis
Process & Timing
The transfer occurs by survivorship at the first spouse’s death rather than through a distribution by the probate court. The deceased spouse’s will therefore cannot direct who receives the entireties property. The surviving spouse becomes the sole owner and may later retitle the property or provide for it through a new will or trust. A practical next step is to review the recorded deed and determine what documentation is needed to update the land records.
Exceptions & Pitfalls
- Heirs’ rights: Children and other heirs generally receive no share of the entireties property at the first spouse’s death unless the surviving spouse later transfers it to them or includes it in an estate plan.
- Other probate assets: The property may avoid probate even though the deceased spouse’s other assets still require estate administration.
- Creditor limits: Protection does not extend to joint obligations of both spouses. If the tenancy terminates, an active judgment lien against one spouse may attach to that spouse’s resulting interest; a lien against the surviving spouse may attach when that spouse acquires sole title.
- Slayer exception: The ordinary survivorship rule does not apply in full when the surviving spouse is legally treated as the slayer of the deceased spouse.
- Ownership changes: Divorce, conveyance, foreclosure, or improper retitling may terminate the tenancy or alter its probate and creditor consequences.
Conclusion
In North Carolina, qualifying entireties property passes to the surviving spouse by survivorship, so the deceased spouse’s interest does not pass through probate or under that spouse’s will. Children and other heirs therefore do not inherit the property at the first death, subject to exceptions such as the slayer rule. The key threshold is whether the deed validly created and preserved the tenancy. Review the deed with a probate attorney and coordinate the surviving spouse’s estate plan.
Talk to a Probate Attorney
If you own property with your spouse or need to update an estate plan, contact Pierce Law Group for a free case evaluation at [email protected] or (919) 341-7055.
