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Committee backs S.3 to preserve tenancy‑by‑the‑entirety creditor protection when spouses transfer property to trusts
Summary
The Ways & Means Committee voted to report S.3 favorably after Legislative Council explained the bill would allow married couples to retain tenancy‑by‑the‑entirety creditor protection when they convey jointly owned property into a trust; the bill includes a retroactivity clause and an opt‑out for settlors.
Patrick Hopps of Legislative Council briefed the committee on S.3 on April 8, explaining that the bill would preserve creditor protection that tenants by the entirety currently enjoy when married couples transfer property into a trust.
Hopps summarized the legal background: a trust creates three roles — settlor (who places property in trust), trustee (the legal owner who manages the trust), and beneficiary (who receives distributions). "One important point about the trustee for purposes of this discussion is that when the property goes into the trust, the trustee becomes the legal…
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