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Tenancy by the Entirety: Forms of Ownership and Will Substitutes For Lincoln National Employees

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Healthcare Provider Update: Healthcare Provider for Lincoln National: Lincoln National Corporation does not directly provide healthcare services. Instead, it operates as a financial services company that offers various insurance and investment solutions. For healthcare coverage, Lincoln National collaborates with health insurance providers like Aetna for its employee benefits and health-related products. Potential Healthcare Cost Increases in 2026: Healthcare costs are projected to rise significantly in 2026, driven by factors such as inflation in medical care and large anticipated increases from major insurers. Premiums for Affordable Care Act (ACA) marketplace plans could soar by over 20% on average, with some states facing hikes that exceed 60%. The potential expiration of enhanced premium subsidies will further exacerbate the situation, leading to a staggering increase of over 75% in out-of-pocket costs for many enrollees. As a result, consumers will need to navigate these challenges carefully, focusing on proactive strategies to manage their healthcare expenses effectively. Click here to learn more

What Is It?

A tenancy by the entirety is a way spouses can own property together. As a Lincoln National employee, if you are the co-owner of property owned as a tenancy by the entirety (you are a tenant by the entirety), that property passes automatically at your death to your surviving spouse without the expense and delay of probate.

Example(s):  Jack and Sylvia own a cabin on a hill as tenants by the entirety. When Jack dies, Sylvia automatically owns the cabin.

You can own most types of property with your spouse as tenants by the entirety. Real estate is the most common type of property to own as tenants by the entirety, but you can own other property (such as bank accounts, securities, and vehicles) in this way. A tenancy by the entirety is almost identical to a joint tenancy, but is available only to married couples.

When Can It Be Used?

You Are Married and Want to Make Your Spouse Co-Owner

Only a married couple can own property as tenants by the entirety.

Your State Permits Tenancy by the Entirety

Not all states permit a tenancy by the entirety. 

The Property You Want to Transfer Can Be Owned As Tenants by the Entirety

Some states restrict the types of property that can be held as a tenancy by the entirety. Other types of property, such as an IRA, can't be owned as a tenancy by the entirety.

Strengths

Avoids the Expense and Delay of Probate

Probate can be expensive, and generally the largest expense is the attorney's fees, especially if they are calculated as a percentage of the gross probate estate. For employees in Lincoln National companies who are strongly invested in real estate, owning your property as a tenancy by the entirety could be beneficial as it enables the possibility of avoiding probate and payment of costly attorney's fees.

Caution:  In reality, it is practically impossible to avoid probate. Generally, some level of probate proceeding will be necessary to settle your estate.

Tip:  Negotiating an hourly rate or flat fee may result in more reasonable attorney's fees.

The person responsible for managing your estate during the probate process (your personal representative) is entitled to a fee for these services, although a friend or relative serving as a personal representative may agree to serve without a fee.

Prevents Additional Probate Proceedings for Property Owned In Other States

Property that you own in another state must go through a separate ancillary probate in that state unless it can be excluded from probate, for example, by owning it as a tenancy by the entirety.

Example(s):  If you own a home in Massachusetts, a cabin in New Hampshire, and a time-share condominium in Colorado, your estate will be probated in all three states. Although each state will probate only the property located in that state, each probate proceeding significantly increases the expense and delay of the entire process.

Minimizes Delays in the Transfer of Property

Probate takes an average of 12 months and may last for several years. All of the probate property generally won't be distributed until the process is completed. However, owning property as a tenancy by the entirety allows for an automatic transfer of that property at your death.

Probate can also interfere with the management of property such as a closely held business or stock portfolio. Although your personal representative is responsible for managing the property until probate is complete, he or she may not have the expertise or authority to make significant management and/or financial decisions. Owning the property as a tenancy by the entirety will result in an automatic transfer of the property and possibly a smoother management transition.

Discourages Interference with Your Plans to Distribute Your Property

Although it seems that anybody can bring a lawsuit, a will is generally much easier to challenge than a transfer of property by tenancy by the entirety.

Is Relatively Simple and Inexpensive to Create

In most instances, taking title to property as tenants by the entirety is not complicated. Many couples purchasing a home will take title as tenants by the entirety without any planning. Generally, you will not need to involve an attorney in creating a tenancy by the entirety. When purchasing a home, however, there are often other good reasons for involving an attorney.

Caution:  Since your state may require you to use specific, unambiguous language when creating a tenancy by the entirety, it might be wise to consult an attorney to confirm that you have actually created a tenancy by the entirety.

Has Intangible and Emotional Benefits

Couples will often decide to own property as tenants by the entirety because it conforms to their feelings of partnership, faith, and unity. Planning to transfer the family home automatically to the surviving spouse may create a sense of well-being.

Caution:  Your family may not actually be able to keep the home if you have not provided for future payments on it.

May Shield Property from the Creditors of the Tenants by the Entirety

In some states, one spouse's creditors cannot attach property held as a tenancy by the entirety. However, assets held as a tenancy by the entirety are protected only as long as both spouses are living and the marriage is not dissolved. This could have drastic consequences if, say, one spouse is sued and the other spouse dies shortly thereafter.

All property owned as tenants by the entirety is immediately exposed to the surviving spouse's current and potential creditors. Further, assets held as a tenancy by the entirety are not protected against joint debts. While titling property as a tenancy by the entirety may be an inexpensive and easy way to protect marital assets, it may not provide secure asset protection over the long term.

May Result In Lower Capital Gains Tax

Your surviving spouse may be subject to less capital gains tax when he or she sells the property than if you had given him or her the property during your life.  In general, you are subject to capital gains taxes on the difference between what you 'paid' for property and what you receive when you sell it. For Lincoln National employees who have high exposure in the real estate market, this benefit is of particular interest as it diminishes taxes paid in transfer or sale of property. Furthermore, after your death, your surviving spouse will be treated as having 'paid' whatever your interest in the property was worth at your death.

Example(s):  Years ago, Dylan and Barbara (husband and wife) bought rental property for $10,000, and owned it as tenants by the entirety. Dylan died when it was worth $100,000. Fifty percent of the property's value was included in Dylan's gross taxable estate. Barbara's tax basis in the property after Dylan's death is $55,000 — one-half of the original purchase price ($5,000) and the amount Dylan's one-half interest was worth at his death ($50,000). If Barbara sells the property for $100,000, she will have a capital gain of $45,000. If Barbara had owned the property outright, her capital gain would be $90,000. However, if Dylan had owned the property outright and left it to Barbara at his death, her basis would be $100,000 and she would have no capital gain. Note that the first $250,000 of capital gain on the sale of a principal residence is generally excluded from capital gains tax. (The excludable amount for a married couple is $500,000.)

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Dylan and Barbara Own as Tenants by the Entirety

Dylan Owns Outright

 

Dylan dies first

Barbara dies first

Dylan dies first

Barbara dies first

Sale Price

$100,000

$100,000

$100,000

$100,000

Tax Basis

-$55,000

-$55,000

-$100,000

-$10,000

Capital Gain

$45,000

$45,000

$0

$90,000

Technical Note:  This increase in what your co-tenant by the entirety is considered to have 'paid' for the property is called a step-up in basis.

Tradeoffs

It Is an Irrevocable Gift of Interest in the Property

Once you make your spouse a tenant by the entirety, he or she is a co-owner of that property for the rest of his or her life unless there is a divorce, an annulment, or an agreement to partition. If you die owning property in a tenancy by the entirety, your spouse will own the property outright and can do what he or she wants with it.

It May Not Be Appropriate If You Have a Large Estate

If you are married and own more than the federal estate tax applicable exclusion amount ($11,580,000 in 2020, $23,160,000 per married couple) in property as a couple, there may be a significant tax advantage in leaving some property to someone other than your spouse. If you make your spouse your joint tenant, you may be unable to take advantage of this strategy for that property. The availability of portability (the estate of a deceased spouse can transfer any unused exclusion to the surviving spouse) in 2011 and later years may make planning easier.

Caution:  If your estate is this large and you are considering owning property in joint tenancy, you should meet with an attorney or tax professional regarding options to minimize potential federal and/or state estate taxes.

It May Not Protect Your Spouse from Your Creditors

The probate process requires that all claims against the estate be presented within months of your death, preventing delayed claims against your estate and beneficiaries.

Technical Note:  The statute of limitations is a rule that prevents lawsuits that haven't been brought quickly enough. Someone can sue you (or your estate) until the statute of limitations for that claim has expired.

Example(s):  If the statute of limitations for a breach of contract lawsuit is seven years, the Record Club has seven years to sue you for failing to buy that seventh cassette. However, if your property passes through probate, that property is immune from claims by your creditors, regardless of whether the claim is barred by the statute of limitations.

Your Interest In Property Held As a Tenancy By the Entirety Is Guaranteed to Go to Your Spouse If You Die First

You cannot leave your interest in property held as a tenancy by the entirety to anyone in your will. Your interest passes automatically to your surviving spouse.

You Cannot Control How the Property Will Be Used After Your Death

The surviving spouse has complete control over the property, which could result in an accidental disinheritance.

Example(s):  Louis and Sally own a house as tenants by the entirety. Louis dies and Sally, as the surviving spouse, owns the house outright. Sally marries Sylvester and they own the house as tenants by the entirety. Sally dies, and Sylvester becomes the sole owner. Louis and Sally's daughter, Patty, receives nothing, which Louis never intended.

It Does Not Give Your Spouse the Legal Right to Manage or Dispose of the Property If You Become Incompetent

If you become incompetent, the fact that you own property in a tenancy by the entirety doesn't automatically allow your spouse to exercise control over the property, even on your behalf.

Example(s):  If a couple owns a house as tenants by the entirety and the husband becomes incompetent, his wife does not have the right to sell or mortgage the property to pay for his care. She will need to have a guardian appointed, unless she has his durable power of attorney, a document giving her the legal right to act on his behalf.

It May Create Problems for Business Owners Seeking To Take Advantage of Certain Estate Planning Strategies

A business owner can take advantage of certain estate planning strategies (such as Section 303 death tax redemptions, Section 2032A special use valuations, and Section 6166 deferral of estate taxes) if his or her interest in the business represents a large enough percentage of his or her total estate. However, if the business interest is owned as a tenancy by the entirety, only half of the business will be included in the estate for estate tax purposes and he or she may not pass the ownership test. Therefore, if you anticipate using one of these techniques, tenancy by the entirety might be disadvantageous.

How to Do It

Evaluate the Desirability of the Strategy

Because taking title to property as tenants by the entirety is simple and inexpensive, it is a very common way for Lincoln National employees to own property. You may be unduly biased in favor of forming a tenancy by the entirety. However, you might be better served by another planning strategy. You should compare the strengths and tradeoffs of a tenancy by the entirety with those of alternative strategies.

Confirm That Tenancy by the Entirety Doesn't Interfere With Other Estate Planning Strategies

Property held as a tenancy by the entirety may interfere with other strategies you may have implemented, such as a credit shelter trust or living trust. You should determine how your property will be distributed at your death under your present estate plan to ensure that unintended consequences do not arise.

Tax Considerations

Income Tax

Your Surviving Spouse May Receive a Stepped-Up Basis in Your Interest in the Property

Half of the property's fair market value may be includable in your estate for estate tax purposes, but your surviving spouse may receive a stepped-up basis in that interest.

Example(s):  Years ago, Dick and Judith (husband and wife) bought their house for $10,000, and held it as tenants by the entirety.  Dick died when the property was worth $100,000. Because they owned the house as tenants by the entirety, 50 percent of the value of the property was subject to Dick's estate taxes. Judith's basis in the property is now $55,000 — Dick's 50 percent interest that has been stepped-up and her $5,000 basis (one-half of the purchase price). If Judith sells the house for $100,000, she will have a capital gain of $45,000 ($100,000 minus the $55,000 basis). If Judith had owned the house outright, her capital gain would be $90,000. However, if Dick had owned the house outright and left it to Judith at his death, her basis would be $100,000 and she would have had no capital gain ($100,000 sale price minus $100,000 basis). (Note that for an individual the first $250,000 of capital gain from the sale of a principal residence is generally excluded from capital gains taxes. The exclusion currently is $500,000 for a married couple's gain from such a sale.)

Tip:  If you were sure which spouse would die first, you could transfer the property to that spouse. If the deceased spouse then left the property to the surviving spouse, the surviving spouse may receive a 100 percent step-up in basis. This would not apply, though, if the spouse receiving the gift died within one year of the gift. The problem is that you can't be absolutely sure and, if you are wrong, the surviving spouse receives no step-up in basis.

Questions & Answers

Why Isn't Property Held As a Tenancy By the Entirety Subject to Probate?

If you own property as a tenancy by the entirety and you die, your interest in the property is automatically transferred to your surviving spouse. The probate court doesn't become involved with property that passes to others at your death because of the form of ownership ('title').

What is the primary purpose of Lincoln National's 401(k) Savings Plan?

The primary purpose of Lincoln National's 401(k) Savings Plan is to help employees save for retirement by providing tax-advantaged investment options.

How can employees at Lincoln National enroll in the 401(k) Savings Plan?

Employees at Lincoln National can enroll in the 401(k) Savings Plan through the company’s online benefits portal or by contacting the HR department for assistance.

Does Lincoln National match employee contributions to the 401(k) Savings Plan?

Yes, Lincoln National offers a matching contribution to the 401(k) Savings Plan, which helps employees maximize their retirement savings.

What types of investments are available in Lincoln National's 401(k) Savings Plan?

Lincoln National's 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and company stock.

What is the minimum contribution percentage for Lincoln National's 401(k) Savings Plan?

The minimum contribution percentage for Lincoln National's 401(k) Savings Plan is typically set at 1% of an employee's salary, but employees are encouraged to contribute more if possible.

Can employees at Lincoln National take loans against their 401(k) Savings Plan balance?

Yes, Lincoln National allows employees to take loans against their 401(k) Savings Plan balance under certain conditions.

What happens to my 401(k) Savings Plan if I leave Lincoln National?

If you leave Lincoln National, you can choose to roll over your 401(k) Savings Plan balance into an IRA or another qualified retirement plan, or you may withdraw the funds, subject to taxes and penalties.

How often can employees change their contribution amounts to Lincoln National's 401(k) Savings Plan?

Employees at Lincoln National can change their contribution amounts to the 401(k) Savings Plan at any time, subject to certain administrative deadlines.

Are there any fees associated with Lincoln National's 401(k) Savings Plan?

Yes, Lincoln National's 401(k) Savings Plan may have administrative fees and investment-related fees, which are disclosed in the plan documents.

What educational resources does Lincoln National provide to help employees understand the 401(k) Savings Plan?

Lincoln National offers educational resources such as workshops, online tools, and one-on-one consultations to help employees understand and manage their 401(k) Savings Plan.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Lincoln National offers a comprehensive retirement package, including a pension plan and the LNC Employees' 401(k) Savings Plan. The pension plan, also known as a defined benefit plan, provides employees with a guaranteed retirement income based on their years of service and salary. The exact formula for the pension plan includes a specific percentage of the final average salary multiplied by the number of years of service. The minimum service requirement is typically five years, and the pension benefits become fully vested at this point. Employees must meet certain age qualifications, generally beginning at age 55 with early retirement options. The 401(k) Savings Plan, also referred to as a defined contribution plan, allows employees to contribute a portion of their pre-tax salary. Lincoln National matches these contributions up to a certain percentage. In 2022, 2023, and 2024, Lincoln enhanced its 401(k) offerings by providing more investment options and improved online tools to help employees manage their retirement savings. Employees become eligible for the 401(k) plan after completing one year of service and reaching age 21. The LNC Employees' 401(k) Savings Plan is notable for its flexibility, allowing participants to make both pre-tax and Roth contributions​ (lincolnfinancial)​ (Business Wire).
Lincoln National Corporation has experienced significant restructuring efforts in 2023 and 2024, including layoffs and changes to its workforce. In early 2024, the company announced a 5% reduction in its workforce, impacting employees across various segments. These layoffs are part of a broader strategic realignment aimed at addressing the company's financial difficulties, which have been compounded by external pressures such as inflation, regulatory changes, and market volatility. Additionally, Lincoln National saw a substantial financial loss in the fourth quarter of 2023, reporting a net loss of $1.2 billion. This loss led to further emphasis on cost-cutting measures, including benefit restructuring, workforce reductions, and pension adjustments​ (S&P Global)​ (AM Best).
For Lincoln National, both employee stock options and Restricted Stock Units (RSUs) are made available as part of their equity compensation plans to incentivize and retain key employees. Lincoln National offers RSUs to employees, with vesting schedules that typically follow a multi-year plan, often with a cliff period followed by gradual vesting. This aligns with common industry practices, where RSUs are granted without an upfront purchase requirement, and they are taxed as ordinary income when they vest​ (Zajac Group)​ (Facet). RSUs at Lincoln National are distributed based on performance and employment status, with eligibility generally extending to full-time employees, directors, and some high-level contractors​ (MarketBeat). In addition to RSUs, Lincoln National also offers Non-Qualified Stock Options (NQSOs). These stock options provide employees the right to purchase company shares at a fixed strike price, with taxation occurring when the options are exercised and based on the difference between the exercise price and the fair market value​ (Facet)​ (Brooklyn Fi). Stock options are generally awarded to senior employees, allowing them to benefit from any increase in Lincoln National’s stock price over time.
Lincoln National offers a robust set of healthcare benefits for its employees, which has seen significant updates over the past few years. In 2023, Lincoln National continued to provide comprehensive health coverage, including medical, dental, and vision insurance, through various plan options. The company places particular emphasis on preventive care, with terms such as “Health Savings Account (HSA),” “Preferred Provider Organization (PPO),” and “Flexible Spending Account (FSA)” frequently used in their communications​ (lincolnfinancial). Additionally, Lincoln National promotes its Employee Assistance Program (EAP), which offers confidential support for both personal and professional challenges. With healthcare costs rising by approximately 5.4% in 2024, Lincoln National, like many employers, has been working to contain expenses while still offering high-quality healthcare options​ (Mercer | Welcome to brighter)​ (Mercer | Welcome to brighter). The importance of Lincoln National’s healthcare benefits cannot be overstated, especially given the current economic and political environment. Rising inflation and healthcare costs have pressured employers to reevaluate their healthcare strategies. Lincoln National’s focus on maintaining affordable care options, despite these challenges, highlights its commitment to employee well-being. This approach is crucial for retaining talent and managing healthcare costs effectively in a turbulent economic landscape, where investments in employee health contribute to long-term organizational success. The company's proactive stance in managing healthcare benefit expenses is a strategic response to both economic pressures and evolving healthcare legislation​ (lincolnfinancial)​ (Mercer | Welcome to brighter).
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For more information you can reach the plan administrator for Lincoln National at , ; or by calling them at .

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