Opinion ID: 4660028
Heading Depth: 2
Heading Rank: 2

Heading: Exemptions for Tenancy by the Entirety

Text: Radiance argues the bankruptcy court erred in determining the Fidelity account is exempt. It contends tenancy by the entirety is disfavored under Wyoming law, and that the Fidelity account is not the sort of personal property that can be held as a tenancy. Even if the Fidelity account was created as a tenancy by the entirety under Wyoming law, Radiance further argues that the Crows’ subsequent conduct severed that tenancy. We reject Radiance’s arguments. Section 522 of the Bankruptcy Reform Act of 1978 authorizes a debtor in bankruptcy to exempt certain property from the bankrupt estate. In particular, § 522(b)(2)(B) permits the exemption of “any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a 2 The concurrence argues the BAP did not “grant” an exemption and its legal determination was non-final because the total amount of the exemption was subject to a later factual determination of the amount of joint debt. We think that view parses the meaning of “grant” as used in Brayshaw too finely. In its own words, the bankruptcy court “allow[ed] [Thomas Crow’s] tenants by the entirety exemption as to the Fidelity account,” Aplt. App. 130, and the BAP affirmed this ruling. This was sufficient to bring the BAP’s determination within the holding of Brayshaw. -8- tenant by the entirety or joint tenant to the extent that such interest . . . is exempt from process under applicable nonbankruptcy law.” This provision “simply recognizes the right which exists under the laws of certain states, to protect entirety property from execution by the creditors of one spouse.” In re Anselmi, 52 B.R. 479, 484 (Bankr. Wyo. 1985). Because there is no federal law of property, whether an exemption exists under § 522(b)(2)(B) is dependent on state law.
A tenancy by the entirety is a common-law estate unique to married couples, with a right of survivorship where the surviving spouse retains the entire interest rather than acquiring the decedent’s interest. Tenancy by the Entirety, Black’s Law Dictionary (11th ed. 2019). Wyoming law recognizes tenancy by the entirety in personal property. Id. at 485 (“It appears that Wyoming is among the minority of states which recognize tenancy by the entirety in personal property.”); Wambeke v. Hopkin, 372 P.2d 470, 475–76 (Wyo. 1962); Wyo. Stat. § 34-1-140 (tenancy by the entirety “as to any interest in real or personal property” may be established “by designating in the instrument . . . the names of such . . . tenants by the entirety”). Radiance points out that while tenancy by the entirety was once presumed at common law, it is now disfavored in Wyoming. Anselmi, 52 B.R. at 487. This only means, however, that “the existence of a tenancy by the entirety -9- will not be presumed . . . in the absence of an express intent to create a right of survivorship.” Id. In Wambeke the Wyoming Supreme Court laid out two alternative ways to prove the creation of a tenancy by the entirety in personal property: 1. Each of the four unities of interest, time, title, and possession must be present, with the added unity of person for a tenancy by the entirety; or 2. In the absence of one or more of the first four unities, it must be evident from the language of the instrument itself that the parties thereto intended to create a right of survivorship. 372 P.2d at 476. The parties agree that the required unities of interest are lacking with respect to the Fidelity account, so the only way the Crows can establish a tenancy by the entirety is by the second alternative described in Wambeke. Whether a particular document constitutes an “instrument” within the meaning of Wambeke is a matter on which the parties strongly disagree. Radiance argues for a narrow definition, and its position is effectively that an investment account like the one at issue here can never be held as a tenancy by the entirety. Radiance contends an “instrument” within the meaning of Wambeke was narrowly defined by the bankruptcy court in Anselmi: “As used by the Wambeke court, ‘instrument’ might include bills, bonds, conveyance, leases, mortgages, contract, promissory notes, deeds, and other similar writing whereby ‘chattel is embodied -10- in a document.’” Anselmi, 52 B.R. at 492 (quoting Restatement (2d) of Conflicts, §§ 248 & 249 cmt. h). Radiance also notes that Wyo. Stat. § 34-1-140 provides that a joint tenancy or tenancy by the entirety “may be established” in an “instrument of conveyance or transfer.” Radiance argues there is nothing in this case that fits this definition of “instrument.” We disagree with Radiance’s position, which would unduly narrow tenancies by the entirety in Wyoming. The relevant passage of Anselmi reads: [A] careful reading of Wambeke indicates that, in this context, [“instrument”] refers to those writings which give formal expression to a legal act or agreement for the purpose of creating, securing, modifying, or terminating a right. As used by the Wambeke court, “instrument” might include bills, bonds, conveyance, leases, mortgages, contract, promissory notes, deeds, and other similar writing whereby “chattel is embodied in a document.” 52 B.R. at 492 (emphasis added). The first sentence provides an apt definition, and is consistent with Wyoming cases that inquire whether the “creating instrument” evidences a clear intention to create a tenancy by the entirety. See, e.g., Choman v. Epperly, 592 P.2d 714, 718 (Wyo. 1979) (citing cases). On the other hand, the second sentence on which Radiance relies is only an example—it indicates the definition of instrument “might include” a document in which the chattel is embodied, not that it is limited to such a document. Similarly, § 34-1- 140 states that a joint tenancy or tenancy by the entirety “may be established” in an instrument of conveyance or transfer—not that it can only be established in such a manner. -11- The Wyoming Supreme Court recently confirmed that § 34-1-140 does not prescribe the only method of creating a right to survivorship. In Fleig v. Estate of Fleig, 413 P.3d 63 (Wyo. 2018), the court held that a husband and wife held a bank account as a joint tenancy with right of survivorship because the membership account contract between the couple and the bank unambiguously evidenced an intent to create a right of survivorship. Id. at 643. 3 Radiance complains Fleig does not involve a tenancy by the entirety. But tenancy by the entirety is merely one species of a right of survivorship, and Wyoming cases treat joint survivorship and tenancy by the entirety interchangeably for analytical purposes. Indeed, the Wambeke standard itself, which indisputably addressed whether a tenancy by the entirety had been created, used the phrase “right of survivorship.” 372 P.2d at 476. Here, the application to open the Fidelity account is a “creating instrument,” and it gave formal expression to an agreement between Fidelity and the Crows to create rights. The application contains a handwritten note expressly labeling the account as a tenancy by the entirety. We therefore find it is “evident from the language of the instrument itself that the parties thereto intended to create a right of survivorship.” Wambeke, 372 P.2d at 476. 3 In addition, other Wyoming cases have accepted bank account signature cards as evidence of intent to create a right of survivorship. See, e.g., Nat’l Bank of Newcastle v. Wartell, 580 P.2d 1142, 1145–46 (Wyo. 1978). -12- Radiance further argues, however, that the application itself contains language allowing either spouse to dispose of the assets of the account without the consent or approval of the other. Citing Anselmi, Radiance argues this provision is inconsistent with the very concept of a tenancy by the entirety. We disagree. Anselmi concludes only that the unity of interest is missing where either spouse is capable of voluntarily alienating the property without consent of the other. 52 B.R. at 491. But the second alternative under Wambeke “recognizes the existence of a joint tenancy without the four unities if the intention to create such is evident.” Choman, 592 P.2d at 715 (emphasis added). In this case, all the parties agree that the four unities are lacking and that a tenancy of the entirety can be proved only by a demonstration of intent based on the language of the instrument itself. We find the Crows proved that requisite intent under the second alternative.
Even if a tenancy by the entirety had been created, Radiance argues it was “severed” by certain actions taken after the Fidelity account was opened. First, it argues that withdrawals from the account by Annabelle Marvin and Jeff Marvin severed the tenancy. Second, Radiance argues that when the Crows entered a stipulation to allow Carol Crow access to a part of the Fidelity account to pay for her husband’s nursing care expenses, the tenancy was severed. We hold the tenancy by the entirety was not severed. -13- Radiance characterizes the Marvins as treating the Fidelity account as a sort of slush fund, withdrawing proceeds on a whim for their own personal benefit. Even accepting this characterization as true, Radiance cites only a single bankruptcy case from Florida in support of their argument that the Marvins’ withdrawals severed the tenancy. In that case, the court stated that if any of the five unities are destroyed, “there is no entireties estate.” In re Pierre, 468 B.R. 419, 426 (Bankr. M.D. Fla. 2012). As discussed above, however, the parties all agree that the required unities are lacking, so it is not clear why Pierre is relevant. In addition, in making the withdrawals, Annabelle Marvin was exercising her power of attorney on behalf of both her parents. The Crows, as the owners of the Fidelity Account, had the right to determine its subsequent disposition, and they did so by granting Annabelle Marvin power of attorney and ratifying each subsequent transfer. Radiance also argues the stipulation in the bankruptcy court to allow Carol Crow to access a portion of the Fidelity funds severed the tenancy. As the BAP noted in this case, however, a debtor’s right to an exemption is determined on the petition date. White v. Stump, 266 U.S. 310, 313 (1924). And the language of § 522(b)(3)(B) refers to “interests of the debtor in property as of the commencement of the case.” Any subsequent agreement concerning the Fidelity account therefore has no bearing on the status of the exemption. -14-