Protecting Your Home Through Marriage

Indiana law, like most states, provides for certain exemptions, which are types and amounts of property interests that every person is entitled to keep free from creditors.  These exemptions are set forth at various points in the Indiana Code, and, since the legislature doesn't address these exemption amounts very frequently, they are tied to an administrative code section (750 IAC 1-1-1) that is periodically amended to account for inflation and cost of living increases.

One of the most important of these exemptions in Indiana, because it is unlimited in amount, is real property owned as tenants by the entireties. This odd-sounding terminology essentially provides that real property owned by two persons as spouses is exempt from execution (seizure and sale to satisfy debts) by any creditors unless those creditors are joint creditors of both spouses (such as is typically the case when the spouses apply for a mortgage together to purchase the property). The property is said to be owned by the marriage collectively, not by either spouse individually.

In other words, you cannot create a tenancy by the entireties unless the property is deeded to both spouses, after the parties are married.  Similarly, the tenancy by the entireties terminates upon divorce into a tenancy in common (which lacks the unlimited exemption protection, limiting you to the $19,300.00 personal residence plus $10,250 real or tangible personal property exemptions).

Thus, for example, say you purchased your property back in 2000, paid off the mortgage, then got married.  If you then deeded the property from yourself to yourself and your spouse as husband and wife (or husband and husband or wife and wife) as tenants by the entireties, and properly recorded that deed, then neither of you can encumber or transfer the property without the other, and no creditor of just one of you can ever seize the property to satisfy debts while you are married.  Even if you individually have $200,000.00 in unpaid student loan debts and credit cards, and the house is worth a million dollars, so long as its titled to you and your spouse as tenants by the entireties, and you remain married and don't have joint creditors, all of that equity is protected.

So if you are recently married or about to get married, and you owned real property individually prior to your marriage, you may want to think about having a deed prepared and recorded to claim the entireties exemption. Additionally, you should think carefully about taking on any debts jointly unless absolutely necessary (such as with a first mortgage).

Disclaimer 

This article is designed to provide a basic understanding of concepts of the law. The law, however, is very much subject to change and to interpretation by different courts. Additionally, the applicable law varies from situation to situation. Accordingly, this article should be viewed as educational in nature, and not to be considered as either legal advice or a substitute for competent advice from a qualified attorney. Mulvey Law LLC and the author of this material encourage that you seek independent legal counsel to address any questions pertaining to particular issues or situations which you may encounter.