Tenancy by the Entirety in Maryland: Creditor Protection and Estate Planning

Tenancy by the entirety is one of the strongest property protections available to married couples in Maryland. It shields jointly held marital property from the individual creditors of either spouse and automatically transfers ownership to the surviving spouse outside of probate.

Maryland is a common law property state, meaning assets belong to whoever holds the title. That makes how you title your property one of the most consequential decisions in estate planning.

How It Works

Tenancy by the entirety is a form of joint ownership available exclusively to married couples. Both spouses own the entire property — neither owns a divisible half. This "unity" structure creates two key benefits:

Creditor protection. If one spouse has individual debts (credit card debt, a personal lawsuit judgment, or business liabilities), creditors cannot force a sale of property held in tenancy by the entirety. They can only reach the debtor spouse's survivorship interest, which has no practical value while both spouses are alive since neither spouse can unilaterally sell or encumber the property.

Automatic survivorship. When one spouse dies, the surviving spouse automatically owns the entire property. No probate filing, no will provision, no court order required. The transfer happens by operation of law.

What It Covers

In Maryland, tenancy by the entirety applies to both real property and personal property:

• Real estate — the family home, investment properties, vacant land
• Bank accounts — checking, savings, CDs (when titled as tenants by the entirety)
• Vehicles — when titled jointly as married couple
• Investment accounts — brokerage accounts, though retirement accounts have their own beneficiary rules

The protection extends to any asset that can be titled in both spouses' names with the entirety designation.

The Limits

Tenancy by the entirety doesn't solve every estate planning problem. Several significant gaps remain:

No protection from joint creditors. If both spouses are liable for a debt (a joint credit card, a co-signed loan, joint tax liability), creditors can reach the entirety property. The protection only applies to the individual debts of one spouse.

No double step-up in basis. Maryland is a common law state, not a community property state. When one spouse dies, only their half of the property receives a stepped-up tax basis. The surviving spouse's half retains the original cost basis. In community property states, the entire property gets a stepped-up basis at the first spouse's death — a significant capital gains advantage that Maryland couples don't receive.

Terminates on divorce. If the marriage ends, tenancy by the entirety automatically converts to tenancy in common. Each ex-spouse owns a 50% undivided interest with no survivorship rights and no creditor protection.

Doesn't address the second death. The property passes cleanly to the surviving spouse, but what happens when that spouse dies? Without a will, trust, or TOD deed, the property enters the surviving spouse's probate estate and follows intestacy rules. Tenancy by the entirety is a single-generation solution.

Doesn't reduce estate taxes. For estates above Maryland's $5 million estate tax exemption, tenancy by the entirety simply delays the tax. The full value of the property is included in the surviving spouse's estate, potentially pushing it above the exemption threshold.

Tenancy by the Entirety vs. Other Options

When You Need More Than Tenancy by the Entirety

For estates under $5 million with a surviving spouse as the intended beneficiary, tenancy by the entirety is efficient and protective. But several common situations require additional planning:

Blended families. If you want assets to eventually pass to children from a prior marriage, tenancy by the entirety sends everything to the surviving spouse — who has no legal obligation to leave anything to your children.

Non-lineal beneficiaries. Leaving property to a niece, nephew, or friend triggers Maryland's 10% inheritance tax. Tenancy by the entirety can't address this because it only transfers to the surviving spouse.

Medicaid planning. While tenancy by the entirety property is generally not a probate asset (and Maryland's Medicaid estate recovery is limited to probate assets), the 60-month look-back period applies to changes in property titling. Adding or removing a spouse from a deed within five years of applying for Medicaid can create eligibility problems.

The Maryland Estate Planning Kit includes a property titling worksheet that maps every asset to its current title structure and identifies which ones need beneficiary designations, TOD deeds, or trust provisions to complete the estate plan beyond what tenancy by the entirety covers.

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