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  • Tenants By Entirety

    Hello,

    Getting ready to start up my taxable retirement account when the attending income starts rolling in the next couple of months.

    I'm in Michigan and currently have an empty vanguard joint taxable account titled JWROS. I'm planning to convert to Joint Tenants by Entirety.

    Before I do that, I've been doing some reading.

    1) It looks like on the bogleheads wiki, it indicates that in Michigan Tenants By the Entirety only applies to real estate. Does anybody know if that is true?
    2) Trying to look into downsides; it seems like from an asset protection standpoint JTBE protects the taxable account if one of us get sued; but if we both die at the same time, then the account goes to probate. Is there anything more I should be considering here?

    TIA

  • #2
    You probably have a higher likely hood of a divorce than a suit over policy limits, make sure you take this into account

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    • #3
      I'm other words, not worth the hassle?

      It seems easy enough to do with a little bit of effort. That's why I'm trying to better understand the downsides first. If all it is is sending in a letter to get some asset protection, but otherwise everything is the same.... Then why not?

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      • #4
        I am not saying it is not worth the hassle. However the likely hood of getting hit with a large pay out is much lower than getting served with a divorce paper. Only you know your situation in life , most people don't plan on a divorce early on. I think you need to take this into account. I have several business and multiple funds. Some are structed differently due to the stage in life I started them. I got threatened by an over limit verdict , which made me assess my own finances and structures.

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        • #5
          From a quick google search, though, it looks like the only thing that happens is anything titled Tenants by Entirety automatically converts to Tenants in Common.

          So again, doesn't seem to make too much of a difference one way or the other, but doing the retitling just adds minor additional asset protection.

          I'm still trying to find possible downsides...

          Edit: I appreciate your input! Thank you

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          • #6
            Originally posted by Random1 View Post
            You probably have a higher likely hood of a divorce than a suit over policy limits, make sure you take this into account
            Correct me if Im wrong, but in the event of divorce your account type means nothing if assets were acquired during the marriage. Imagine Bill Gates going to his divorce lawyer saying “Well all my billions in Microsoft stock were in my personal account not our joint account so I get to keep it all, right?” His lawyer would laugh.

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            • #7
              Tenants by the Entirety is an asset protection move, not really an estate planning move. It only works while both spouses are alive. If allowed in your state, why not use it? I see little downside even if the risk of needing it is very low.
              Helping those who wear the white coat get a fair shake on Wall Street since 2011

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              • #8
                Although it is rare to get sued over policy limits, it did happen to two of my good friends in Texas. And they are endocrinologists and not even surgeons. Their patient had a “tumor” and the neurosurgeon removed the pituitary gland, not a tumor. The results were catastrophic for the patient. The lawsuit was for millions above their policy limits. The neurosurgeon, left town and I don’t know what happened to him financially. But my two endocrinologist friends did not have their assets protected and had to pay out several hundred thousands of dollars more than their million dollar policy limits they both had. They are both still working full time into their late sixties.

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