Tenancy by the Entirety by State (2026): Creditors and Step-Up

What the statutes say, state by state

We read the statute text for each jurisdiction below on October 22, 2026. Where the official site blocked us we used a copy and say so in the notes (North Carolina, Alaska, Indiana and Tennessee text is as reproduced by FindLaw, which warns that it may not be the latest version). A state not in the table is not verified, not a state that lacks the form.

Missouri shows why “not verified” matters. Its default statute makes a grant to two or more persons a tenancy in common but excludes “husband and wife” from that rule (RSMo 442.450). The section does not use the words tenancy by the entirety, so we did not count the state.

The creditor rule is mostly not in the property statute. Of the statutes above, only Massachusetts, Virginia, the District of Columbia and Wyoming say anything about creditors. In the rest, whether one spouse’s creditor can reach the property is decided by court decisions we did not read. That is a reason to ask a lawyer in the state where the property sits, not a reason to assume either answer.

Rental property, LLC interests and fund shares

The statutes tell you what kind of asset can be titled this way. Real estate is covered in every statute above that addresses the subject. Personal property is expressly covered in Virginia, New Jersey, Michigan and Wyoming, and Maryland’s grant section reaches “any interest in property.” An LLC membership interest or units in a fund are personal property, so in our reading those statutes leave room to title them as tenants by the entirety; none of the sections says so in terms, and we did not find a statute that addresses LLC interests. Treat any claim that “the LLC interest is protected” as a question for counsel. If you are weighing an LLC against joint title for a rental, our page on an LLC for rental property covers the liability side.

Two practical points come straight from the text. In North Carolina and Virginia neither spouse can sell or encumber the real property alone, which cuts both ways for a landlord who wants a refinancing signed by one spouse. And Florida’s dissolution rule means the form disappears on divorce, so the protection and the survivorship both depend on the marriage lasting.

Federal law: the IRS, bankruptcy and the step-up

The IRS. A federal tax lien arises “upon all property and rights to property, whether real or personal, belonging to such person” who neglects to pay a tax after demand (26 U.S.C. 6321). In United States v. Craft, 535 U.S. 274 (argued January 14, 2002, decided April 17, 2002), the Court held that a husband’s interests in entireties property “constitute ‘property’ or ‘rights to property’” to which the lien may attach. The case came from Michigan. Entireties title is therefore not a shield against a tax debt of one spouse.

Bankruptcy. A debtor may exempt an interest as a tenant by the entirety “to the extent that such interest … is exempt from process under applicable nonbankruptcy law” (11 U.S.C. 522(b)(3)(B)). The federal rule hands the question back to the state, which is why the creditor column above matters.

Estate tax and basis. Section 2040(b)(1) includes one-half of the value of a qualified joint interest in the gross estate, and (b)(2)(A) lists property held “as tenants by the entirety” by the decedent and spouse. The Treasury Regulation applies the same half to property the spouses acquired by will or gift as tenants by the entirety (26 CFR 20.2040-1). Publication 559 adds that this is true “regardless of how much each contributed toward the purchase price.” The new basis follows the inclusion (26 U.S.C. 1014(b)(9)), so the survivor’s own half keeps its cost.

Publication 559 (2025) gives the formula and an example. The survivor adds one-half of the property’s cost basis to the value included in the gross estate, then subtracts depreciation. Two spouses bought a rental as tenants by the entirety for $60,000; it was worth $100,000 when one died, with $20,000 of depreciation allowed. The survivor’s basis is $70,000 ($30,000 + $50,000 − $10,000). Siblings holding the same sort of rental as joint tenants, under another example on the same page, reach $80,000, because the rule for non-spouses includes the part the decedent paid for. The comparison is on our page about tenants in common and joint tenancy.

Worked example (our arithmetic)

A couple bought a rental for $400,000, titled as tenants by the entirety, and $80,000 of depreciation was allowed before the first spouse died. It was worth $700,000 at death.

Depreciation recapture and the rate on the gain are not modeled. The point is the size of the gap: for a couple who live in a community-property state, the form of title can matter as much as the creditor question. Our page on step-up in basis walks through the other routes, including a deed into a living trust, where Virginia and the District of Columbia keep the creditor immunity if the conditions are met.

Decision points

• Does your state recognize it for the asset you own? The table shows real estate in the statutes that address it, personal property expressly in four, and a principal-residence limit on the Massachusetts creditor shield.
• What is the title today? In Florida a deed to a married couple that does not say “by the entirety” is a tenancy in common (689.15); in New York and North Carolina the default is the reverse.
• Do you plan to refinance, sell or move property into a trust? The Virginia and North Carolina rules mean both spouses sign; the Virginia and D.C. trust sections have conditions you must keep.
• Is a tax debt or a business debt the realistic risk? The IRS can reach the interest, so the form helps most against ordinary creditors of one spouse, and only where state law gives that result.
• Where will the survivor be taxed? One-half of the value is included at death, and only that half is stepped up unless the couple holds community property.

What a reader can do with this

• Find your state in the table and read its section (the citation column gives the section numbers), then check any copied text against your state’s official site, since several of the texts we used are copies.
• Pull the deed to each rental and second home and read the vesting clause: does it say “by the entirety,” “tenants in common,” “joint tenants with right of survivorship,” or nothing?
• Write down the first-death numbers. Use cost, depreciation to date and an estimate of value; the Publication 559 formula gives the survivor’s basis, and the community-property comparison shows what the form of title costs.
• Ask a real estate attorney in the property’s state whether the creditor rule for your asset is statute or case law, and what a refinance or a move into a trust does to it.
• If you are choosing between co-ownership forms, compare with tenants in common and joint tenancy and, for Florida, with the enhanced life estate deed.

FAQ

Sources, read and saved on October 22, 2026: Florida Statutes 689.15 (leg.state.fl.us); Code of Virginia 55.1-136 (law.lis.virginia.gov); Maryland Real Property 4-108 (mgaleg.maryland.gov); D.C. Code 42-516 (code.dccouncil.gov); New York EPTL 6-2.2 and Massachusetts G.L. c. 209, section 1, Michigan MCL 557.71 (Internet Archive copies of the legislatures’ pages); N.J.S.A. 46:3-17.2 (Justia); Wyoming Statutes title 34 (wyoleg.gov); ORS 93.180 (oregon.public.law); RSMo 442.450 (revisor.mo.gov); North Carolina G.S. 41-56 to 41-59, Alaska Statutes 34.15.110, Indiana Code 32-17-3-1 and Tennessee Code 66-1-109 (FindLaw copies); 26 U.S.C. 1014, 2040 and 6321, 11 U.S.C. 522 and 26 CFR 20.2040-1 (Cornell LII); IRS Publication 559 (2025); United States v. Craft, 535 U.S. 274 (2002) (Library of Congress). This is analysis of public documents, not investment, legal or tax advice.