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Tenancy by the Entirety: Forms of Ownership and Will Substitutes For Southwest Gas Holdings Employees

Healthcare Provider Update: Healthcare Provider for Southwest Gas Holdings Southwest Gas Holdings provides healthcare benefits through a variety of insurers, primarily utilizing Aetna for their healthcare plans. This partnership enables employees to access a broad network of healthcare services. Expected Healthcare Cost Increases in 2026 As we approach 2026, healthcare costs are anticipated to soar, significantly impacting those affiliated with Southwest Gas Holdings. This expected surge stems from factors such as the expiration of enhanced federal subsidies for Affordable Care Act (ACA) plans, which could lead to a staggering increase of over 75% in out-of-pocket premiums for many enrollees. Moreover, aggressive rate hikes from major insurers, combined with rising medical costs, suggest that employees and retirees may face a challenging financial landscape in the coming year. Proactive management of health benefits and planning will be crucial for individuals navigating these increasing costs. Click here to learn more

What Is It?

A tenancy by the entirety is a way spouses can own property together. As a Southwest Gas Holdings 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 Southwest Gas Holdings 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 Southwest Gas Holdings 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 Southwest Gas Holdings 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').

How does the Southwest Carpenters Pension Plan accommodate changes in benefits for employees who have been affected by the COVID-19 pandemic, and what specific provisions have been implemented to ensure continuity of pension credit during such interruptions? Employees of the Southwest Carpenters Pension Plan are particularly encouraged to review how these provisions may impact their retirement plans and benefits, especially given the unprecedented circumstances of the pandemic.

The Southwest Carpenters Pension Plan accommodated changes due to COVID-19 by extending various deadlines for participants, such as the 12-month deadline to apply for pension credit for periods of disability, and other deadlines regarding claims and appeals. These extensions were applied from March 1, 2020, to a period of up to one year after the original deadline or 60 days after the end of the COVID-19 national emergency, ensuring continuity of pension credit during the pandemic interruptions(Southwest Carpenters Pe…).

What enhancements to pension benefit calculations have been introduced for the years following January 1, 2021, under the Southwest Carpenters Pension Plan, and how do these changes affect participants working more than 1,800 hours? This question emphasizes the implications of increased benefit accrual rates and the actual processes employees must follow to calculate their pensions effectively.

Enhancements to pension benefit calculations effective January 1, 2021, under the Southwest Carpenters Pension Plan include an increase in the monthly benefit accrual rate for participants working 1,800 hours or more. The rate increased from $100 to $200, and for those working more than 1,800 hours, a maximum benefit accrual rate of $244.44 was introduced(Southwest Carpenters Pe…).

In the context of the Southwest Carpenters Pension Plan, could you explain the eligibility criteria for receiving a Service Pension and how employees can accumulate the necessary Pension Credits more quickly? This consideration is vital for members who wish to understand the retirement options available to them and the strategies they might employ in their careers to maximize their benefits under the Southwest Carpenters Pension Plan.

Employees of the Southwest Carpenters Pension Plan are eligible for a Service Pension after earning 30 years of Pension Credit. Additional Service Pension Eligibility Credit was introduced, allowing employees working over 1,800 hours annually to accumulate credits more quickly, up to a maximum of 2,200 hours(Southwest Carpenters Pe…).

How do temporary disability benefits interact with the accumulation of Pension Credits within the Southwest Carpenters Pension Plan? Specifically, employees may have questions about how their working history and service time might be affected should they take leave for health-related reasons, highlighting the intricate balance between pay and benefits during challenging times.

Temporary disability benefits under the Southwest Carpenters Pension Plan allow participants to accumulate Pension Credits during non-working periods if they are on short-term disability or receiving workers' compensation. Pension Credits can be granted for up to 1,200 hours annually, depending on the nature of the disability and employment history(Southwest Carpenters Pe…).

What are the implications of the revised definitions under the Required Beginning Date as specified by the Southwest Carpenters Pension Plan, particularly in compliance with the SECURE Act (Setting Every Community Up for Retirement Enhancement Act)? Employees should understand how these legislative changes affect their retirement strategies, especially in light of penalties for failing to comply with mandatory commencement dates.

The Required Beginning Date for the Southwest Carpenters Pension Plan was revised to comply with the SECURE Act. Participants born on or after July 1, 1949, must begin receiving benefits by April 1 of the calendar year following the year they turn 72. Failure to comply with this could result in a 50% excise tax(Southwest Carpenters Pe…).

How can employees of the Southwest Carpenters Pension Plan navigate the process for applying for pension credit during periods of Temporary Disability, and what specific documentation is required? This inquiry encourages a deeper understanding of protocol surrounding disability applications and the associated benefits that participants are entitled to under the Plan.

Employees applying for pension credit during periods of Temporary Disability must submit a written application within one year of the onset of the disability, and provide documentation such as state-approved short-term disability certification or workers' compensation benefits(Southwest Carpenters Pe…).

What are the implications of the retroactive increases to the Southwest Carpenters Pension Plan benefits aimed at participants who accrued credit during the years 2011 to 2020, and how can affected employees determine their eligibility for said increases? Employees often seek clarification on how historical contributions can manifest in current benefits.

Retroactive increases to the Southwest Carpenters Pension Plan benefits for the years 2011 to 2020 apply to participants who worked at least 1,000 hours in 2020 or under specific collective bargaining agreements. A 50% increase in benefit accrual rates was applied to these years, and eligible employees can determine their eligibility based on their hours worked(Southwest Carpenters Pe…).

What role does the Southwest Carpenters Administrative Office play in assisting employees who have questions regarding modifiability in their pension plans, and what are the best methods for contacting them for assistance? This question highlights the importance of communication within the organization concerning employee inquiries and issue resolution.

The Southwest Carpenters Administrative Office assists employees with questions regarding modifications to their pension plans. Participants can contact them at (213) 386-8590 or (800) 293-1370 for personalized assistance(Southwest Carpenters Pe…).

Can you detail the factors influencing the Benefit Accrual Rate for participants of the Southwest Carpenters Pension Plan for the calendar years after 2021, and how might employees calculate their expected pension benefits? Participants will want to understand the nuances of how their benefits are computed to make informed decisions regarding their retirement planning.

The Benefit Accrual Rate for participants of the Southwest Carpenters Pension Plan after 2021 increased to $200 for 1,800 hours worked, with higher accrual rates for additional hours. Employees can calculate their benefits by multiplying their benefit accrual rate by the applicable benefit factor(Southwest Carpenters Pe…).

In the event of legal actions regarding benefits under ERISA against the Southwest Carpenters Pension Plan, what venue restrictions apply, and what does this mean for participants seeking resolution in disputes? Employees need to be informed of the legal frameworks governing their benefits and understand their rights and the procedures that affect their claims within the Southwest Carpenters Pension Plan.

Legal actions regarding benefits under ERISA against the Southwest Carpenters Pension Plan must be filed in Federal District Court in Los Angeles County, California. This venue restriction defines the jurisdiction where participants must file claims(Southwest Carpenters Pe…).