No. 00-1831.

UNITED STATES v. CRAFT

Decided April 17, 2002

Argued January 14, 2002 —

with whom Justice Thomas joins,

with whom Justice Stevens and Justice Scalia join,

Kent L. Jones argued the cause for the United States. With him on the briefs were Solicitor General Olson, Assist­ant Attorney General O'Connor, Deputy Solicitor General Wallace, David English Carmack, and Joan I. Oppenheimer.

Jeffrey S. Sutton argued the cause for respondent. With him on the briefs were Chad A. Readier, Jeffrey A. Moyer, and Michael Dubetz, Jr.

Justice O’Connor

delivered the opinion of the Court.

This case raises the question whether a tenant by the en­tirety possesses “property” or “rights to property” to which a federal tax lien may attach. 26 U.S.C. § 6321. Relying on the state law fiction that a tenant by the entirety has no separate interest in entireties property, the United States Court of Appeals for the Sixth Circuit held that such prop­erty is exempt from the tax lien. We conclude that, despite the fiction, each tenant possesses individual rights in the es­tate sufficient to constitute “property” or “rights to prop­erty” for the purposes of the lien, and reverse the judgment of the Court of Appeals.

I

In 1988, the Internal Revenue Service (IRS) assessed $482,446 in unpaid income tax liabilities against Don Craft, the husband of respondent Sandra L. Craft, for failure to file federal income tax returns for the years 1979 through 1986. App. to Pet. for Cert. 45a, 72a. When he failed to pay, a federal tax lien attached to “all property and rights to property, whether real or personal, belonging to” him. 26 U.S.C. § 6321.

At the time the lien attached, respondent and her husband owned a piece of real property in Grand Rapids, Michigan, as tenants by the entirety. App. to Pet. for Cert. 45a. After notice of the lien was filed, they jointly executed a quitclaim deed purporting to transfer the husband’s interest in the property to respondent for one dollar. Ibid. When respondent attempted to sell the property a few years later, a title search revealed the lien. The IRS agreed to release the lien and allow the sale with the stipulation that half of the net proceeds be held in escrow pending determination of the Government’s interest in the property. Ibid.

Respondent brought this action to quiet title to the escrowed proceeds. The Government claimed that its lien had attached to the husband’s interest in the tenancy by the en­tirety. It further asserted that the transfer of the property to respondent was invalid as a fraud on creditors. Id., at 46a-47a. The District Court granted the Government’s motion for summary judgment, holding that the federal tax lien attached at the moment of the transfer to respondent, which terminated the tenancy by the entirety and entitled the Government to one-half of the value of the property. No. 1:93-CV-306, 1994 WL 669680, *3 (WD Mich., Sept. 12, 1994).

Both parties appealed. The Sixth Circuit held that the tax lien did not attach to the property because under Michi­gan state law, the husband had no separate interest in prop­erty held as a tenant by the entirety. 140 F. 3d 638, 643 (1998). It remanded to the District Court to consider the Government’s alternative claim that the conveyance should be set aside as fraudulent. Id., at 644.

On remand, the District Court concluded that where, as here, state law makes property exempt from the claims of creditors, no fraudulent conveyance can occur. 65 F. Supp. 2d 651, 657-658 (WD Mich. 1999). It found, however, that respondent’s husband’s use of nonexempt funds to pay the mortgage on the entireties property, which placed them be­yond the reach of creditors, constituted a fraudulent act under state law, and the court awarded the IRS a share of the proceeds of the sale of the property equal to that amount. Id., at 659.

Both parties appealed the District Court’s decision, the Government again claiming that its lien attached to the husband’s interest in the entireties property. The Court of Appeals held that the prior panel’s opinion was law of the case on that issue. 233 F. 3d 358, 363-369 (CA6 2000). It also affirmed the District Court’s determination that the husband’s mortgage payments were fraudulent. Id., at 369-375.

We granted certiorari to consider the Government’s claim that respondent’s husband had a separate interest in the en­tireties property to which the federal tax lien attached. 533 U.S. 976 (2001).

II

Whether the interests of respondent’s husband in the prop­erty he held as a tenant by the entirety constitutes “property and rights to property” for the purposes of the federal tax lien statute, 26 U.S.C. § 6321, is ultimately a question of fed­eral law. The answer to this federal question, however, largely depends upon state law. The federal tax lien statute itself “creates no property rights but merely attaches conse­quences, federally defined, to rights created under state law.” United States v. Bess, 357 U.S. 51, 55 (1958); see also United States v. National Bank of Commerce, 472 U.S. 713, 722 (1985). Accordingly, “[w]e look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer’s state-delineated rights qualify as ‘property’ or ‘rights to property’ within the compass of the federal tax lien legislation.” Drye v. United States, 528 U.S. 49, 58 (1999).

A common idiom describes property as a “bundle of sticks”—a collection of individual rights which, in certain combinations, constitute property. See B. Cardozo, Para­doxes of Legal Science 129 (1928) (reprint 2000); see also Dickman v. Commissioner, 465 U.S. 330, 336 (1984). State law determines only which sticks are in a person’s bundle. Whether those sticks qualify as “property” for purposes of the federal tax lien statute is a question of federal law.

In looking to state law, we must be careful to consider the substance of the rights state law provides, not merely the labels the State gives these rights or the conclusions it draws from them. Such state law labels are irrelevant to the fed­eral question of which bundles of rights constitute property that may be attached by a federal tax lien. In Drye v. United States, supra, we considered a situation where state law allowed an heir subject to a federal tax lien to disclaim his interest in the estate. The state law also provided that such a disclaimer would “creat[e] the legal fiction” that the heir had predeceased the decedent and would correspond­ingly be deemed to have had no property interest in the es­tate. Id., at 53. We unanimously held that this state law fiction did not control the federal question and looked instead to the realities of the heir’s interest. We concluded that, despite the State’s characterization, the heir possessed a “right to property” in the estate—the right to accept the inheritance or pass it along to another—to which the federal lien could attach. Id., at 59-61.

III

We turn first to the question of what rights respondent’s husband had in the entireties property by virtue of state law. In order to understand these rights, the tenancy by the entirety must first be placed in some context.

English common law provided three legal structures for the concurrent ownership of property that have survived into modern times: tenancy in common, joint tenancy, and tenancy by the entirety. 1 G. Thompson, Real Property § 4.06(g) (D. Thomas ed. 1994) (hereinafter Thompson). The tenancy in common is now the most common form of concur­rent ownership. 7 R. Powell & P. Rohan, Real Property § 51.01[3] (M. Wolf ed. 2001) (hereinafter Powell). The com­mon law characterized tenants in common as each owning a separate fractional share in undivided property. Id., § 50.01[1]. Tenants in common may each unilaterally alien­ate their shares through sale or gift or place encumbrances upon these shares. They also have the power to pass these shares to their heirs upon death. Tenants in common have many other rights in the property, including the right to use the property, to exclude third parties from it, and to receive a portion of any income produced from it. Id., §§ 50.03-50.06.

Joint tenancies were the predominant form of concurrent ownership at common law, and still persist in some States today. 4 Thompson § 31.05. The common law characterized each joint tenant as possessing the entire estate, rather than a fractional share: “[J]oint-tenants have one and the same interest...held by one and the same undivided possession.” 2 W. Blackstone, Commentaries on the Laws of England 180 (1766). Joint tenants possess many of the rights enjoyed by tenants in common: the right to use, to exclude, and to enjoy a share of the property’s income. The main difference be­tween a joint tenancy and a tenancy in common is that a joint tenant also has a right of automatic inheritance known as “survivorship.” Upon the death of one joint tenant, that tenant’s share in the property does not pass through will or the rules of intestate succession; rather, the remaining ten­ant or tenants automatically inherit it. Id., at 183; 7 Powell § 51.01 [3]. Joint tenants’ right to alienate their individual shares is also somewhat different. In order for one tenant to alienate his or her individual interest in the tenancy, the estate must first be severed—that is, converted to a tenancy in common with each tenant possessing an equal fractional share. Id., § 51.04[1]. Most States allowing joint tenancies facilitate alienation, however, by allowing severance to auto­matically accompany a conveyance of that interest or any other overt act indicating an intent to sever. Ibid.

A tenancy by the entirety is a unique sort of concurrent ownership that can only exist between married persons. 4 Thompson § 33.02. Because of the common-law fiction that the husband and wife were one person at law (that person, practically speaking, was the husband, see J. Cribbet et al., Cases and Materials on Property 329 (6th ed. 1990)), Black­stone did not characterize the tenancy by the entirety as a form of concurrent ownership at all. Instead, he thought that entireties property was a form of single ownership by the marital unity. Orth, Tenancy by the Entirety: The Strange Career of the Common-Law Marital Estate, 1997 B. Y. U. L. Rev. 35, 38-39. Neither spouse was considered to own any individual interest in the estate; rather, it be­longed to the couple.

Like joint tenants, tenants by the entirety enjoy the right of survivorship. Also like a joint tenancy, unilateral alien­ation of a spouse’s interest in entireties property is typically not possible without severance. Unlike joint tenancies, however, tenancies by the entirety cannot easily be severed unilaterally. 4 Thompson § 33.08(b). Typically, severance requires the consent of both spouses, id., § 33.08(a), or the ending of the marriage in divorce, id., § 33.08(d). At com­mon law, all of the other rights associated with the entireties property belonged to the husband: as the head of the house­hold, he could control the use of the property and the exclu­sion of others from it and enjoy all of the income produced from it. Id., § 33.05. The husband’s control of the property was so extensive that, despite the rules on alienation, the common law eventually provided that he could unilaterally alienate entireties property without severance subject only to the wife’s survivorship interest. Orth, supra, at 40-41.

With the passage of the Married Women’s Property Acts in the late 19th century granting women distinct rights with respect to marital property, most States either abolished the tenancy by the entirety or altered it significantly. 7 Powell § 52.01[2]. Michigan’s version of the estate is typical of the modern tenancy by the entirety. Following Blackstone, Michigan characterizes its tenancy by the entirety as creat­ing no individual rights whatsoever: “It is well settled under the law of this State that one tenant by the entirety has no interest separable from that of the other....Each is vested with an entire title.” Long v. Earle, 277 Mich. 505, 517, 269 N. W. 577, 581 (1936). And yet, in Michigan, each tenant by the entirety possesses the right of survivorship. Mich. Comp. Laws Ann. § 554.872(g) (West Supp. 1997), recodified at § 700.2901(2)(g) (West Supp. Pamphlet 2001). Each spouse—the wife as well as the husband—may also use the property, exclude third parties from it, and receive an equal share of the income produced by it. See § 557.71 (West 1988). Neither spouse may unilaterally alienate or encumber the property, Long v. Earle, supra, at 517, 269 N. W., at 581; Rogers v. Rogers, 136 Mich. App. 125, 134, 356 N. W. 2d 288, 292 (1984), although this may be accomplished with mutual consent, Eadus v. Hunter, 249 Mich. 190, 228 N. W. 782 (1930). Divorce ends the tenancy by the en­tirety, generally giving each spouse an equal interest in the property as a tenant in common, unless the divorce de­cree specifies otherwise. Mich. Comp. Laws Ann. § 552.102 (West 1988).

In determining whether respondent’s husband possessed “property” or “rights to property” within the meaning of 26 U.S.C. § 6321, we look to the individual rights created by these state law rules. According to Michigan law, respond­ent’s husband had, among other rights, the following rights with respect to the entireties property: the right to use the property, the right to exclude third parties from it, the right to a share of income produced from it, the right of survivor-­ship, the right to become a tenant in common with equal shares upon divorce, the right to sell the property with the respondent’s consent and to receive half the proceeds from such a sale, the right to place an encumbrance on the property with the respondent’s consent, and the right to block respondent from selling or encumbering the property unilaterally.

IV

We turn now to the federal question of whether the rights Michigan law granted to respondent’s husband as a tenant by the entirety qualify as “property” or “rights to property” under § 6321. The statutory language authorizing the tax lien “is broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have.” United States v. National Bank of Commerce, 472 U.S., at 719-720. “Stronger language could hardly have been selected to reveal a purpose to assure the collection of taxes.” Glass City Bank v. United States, 326 U.S. 265, 267 (1945). We conclude that the husband’s rights in the entireties property fall within this broad statutory language.

Michigan law grants a tenant by the entirety some of the most essential property rights: the right to use the property, to receive income produced by it, and to exclude others from it. See Dolan v. City of Tigard, 512 U.S. 374, 384 (1994) (“[T]he right to exclude others” is “‘one of the most essential sticks in the bundle of rights that are commonly character­ized as property’” (quoting Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979))); Loretto v. Teleprompter Manhat­tan CATV Corp., 458 U.S. 419, 435 (1982) (including “use” as one of the “[p]roperty rights in a physical thing”). These rights alone may be sufficient to subject the husband’s inter­est in the entireties property to the federal tax lien. They gave him a substantial degree of control over the entireties property, and, as we noted in Drye, “in determining whether a federal taxpayer’s state-law rights constitute ‘property’ or ‘rights to property,’ [t]he important consideration is the breadth of the control the [taxpayer] could exercise over the property.” 528 U.S., at 61 (some internal quotation marks omitted).

The husband’s rights in the estate, however, went beyond use, exclusion, and income. He also possessed the right to alienate (or otherwise encumber) the property with the con­sent of respondent, his wife. Loretto, supra, at 435 (the right to “dispose” of an item is a property right). It is true, as respondent notes, that he lacked the right to unilaterally alienate the property, a right that is often in the bundle of property rights. See also post, at 296-297 (THOMAS, J., dis­senting). There is no reason to believe, however, that this one stick—the right of unilateral alienation—is essential to the category of “property.”

This Court has already stated that federal tax liens may attach to property that cannot be unilaterally alienated. In United States v. Rodgers, 461 U.S. 677 (1983), we considered the Federal Government’s power to foreclose homestead property attached by a federal tax lien. Texas law provided that “‘the owner or claimant of the property claimed as homestead [may not], if married, sell or abandon the home­stead without the consent of the other spouse.’” Id., at 684-­685 (quoting Tex. Const., Art. 16, § 50). We nonetheless stated that “[i]n the homestead context . . . , there is no doubt...that not only do both spouses (rather than neither) have an independent interest in the homestead property, but that a federal tax lien can at least attach to each of those interests.” 461 U.S., at 703, n. 31; cf. Drye, supra, at 60, n. 7 (noting that “an interest in a spendthrift trust has been held to constitute ‘“property” for purposes of § 6321’ even though the beneficiary may not transfer that interest to third parties”).

Excluding property from a federal tax lien simply because the taxpayer does not have the power to unilaterally alienate it would, moreover, exempt a rather large amount of what is commonly thought of as property. It would exempt not only the type of property discussed in Rodgers, but also some community property. Community property States often provide that real community property cannot be alienated without the consent of both spouses. See, e.g., Ariz. Rev. Stat. Ann. § 25-214(C) (2000); Cal. Fam. Code Ann. § 1102 (West 1994); Idaho Code § 32-912 (1996); La. Civ. Code Ann., Art. 2347 (West Supp. 2002); Nev. Rev. Stat. Ann. § 123.230(3) (Supp. 2001); N. M. Stat. Ann. § 40-3-13 (1999); Wash. Rev. Code § 26.16.030(3) (1994). Accordingly, the fact that re­spondent’s husband could not unilaterally alienate the prop­erty does not preclude him from possessing “property and rights to property” for the purposes of § 6321.

Respondent’s husband also possessed the right of survivor-­ship—the right to automatically inherit the whole of the es­tate should his wife predecease him. Respondent argues that this interest was merely an expectancy, which we sug­gested in Drye would not constitute “property” for the pur­poses of a federal tax lien. 528 U.S., at 60, n. 7 (“[We do not mean to suggest] that an expectancy that has pecuniary value...would fall within § 6321 prior to the time it ripens into a present estate”). Drye did not decide this question, however, nor do we need to do so here. As we have dis­cussed above, a number of the sticks in respondent’s hus­band’s bundle were presently existing. It is therefore not necessary to decide whether the right to survivorship alone would qualify as “property” or “rights to property” under § 6321.

That the rights of respondent’s husband in the entireties property constitute “property” or “rights to property” “be­longing to” him is further underscored by the fact that, if the conclusion were otherwise, the entireties property would belong to no one for the purposes of § 6321. Respondent had no more interest in the property than her husband; if neither of them had a property interest in the entireties property, who did? This result not only seems absurd, but would also allow spouses to shield their property from federal taxation by classifying it as entireties property, facilitating abuse of the federal tax system. Johnson, After Drye: The Likely Attachment of the Federal Tax Lien to Tenancy-by-the-­Entireties Interests, 75 Ind. L. J. 1163, 1171 (2000).

Justice Scalia’s and Justice Thomas’ dissents claim that the conclusion that the husband possessed an interest in the entireties property to which the federal tax lien could attach is in conflict with the rules for tax liens relating to partnership property. See post, at 289 (opinion of Scalia, J.); see also post, at 295-296, n. 4 (opinion of Thomas, J.). This is not so. As the authorities cited by Justice Thomas reflect, the federal tax lien does attach to an individual part­ner’s interest in the partnership, that is, to the fair market value of his or her share in the partnership assets. Ibid. (citing B. Bittker & M. McMahon, Federal Income Taxation of Individuals ¶ 44.5[4][a] (2d ed. 1995 and 2000 Cum. Supp.)); see also 1 A. Bromberg & L. Ribstein, Partnership § 3.05(d) (2002-1 Supp.) (hereinafter Bromberg & Ribstein) (citing Uniform Partnership Act § 28, 6 U. L. A. 744 (1995)). As a holder of this lien, the Federal Government is entitled to “receive...the profits to which the assigning partner would otherwise be entitled,” including predissolution distributions and the proceeds from dissolution. Uniform Partnership Act § 27(1), id., at 736.

There is, however, a difference between the treatment of entireties property and partnership assets. The Federal Government may not compel the sale of partnership assets (although it may foreclose on the partner’s interest, 1 Brom­berg & Ribstein § 3.05(d)(3)(iv)). It is this difference that is reflected in Justice Scalia’s assertion that partnership property cannot be encumbered by an individual partner’s debts. See post, at 289. This disparity in treatment be­tween the two forms of ownership, however, arises from our decision in United States v. Rodgers, supra (holding that the Government may foreclose on property even where the co-­owners lack the right of unilateral alienation), and not our holding today. In this case, it is instead the dissenters’ the­ory that departs from partnership law, as it would hold that the Federal Government’s lien does not attach to the hus­band’s interest in the entireties property at all, whereas the lien may attach to an individual’s interest in partnership property.

Respondent argues that, whether or not we would con­clude that respondent’s husband had an interest in the en­tireties property, legislative history indicates that Congress did not intend that a federal tax lien should attach to such an interest. In 1954, the Senate rejected a proposed amend­ment to the tax lien statute that would have provided that the lien attach to “property or rights to property (including the interest of such person as tenant by the entirety).” S. Rep. No. 1622, 83d Cong., 2d Sess., 575 (1954). We have elsewhere held, however, that failed legislative proposals are “a particularly dangerous ground on which to rest an inter­pretation of a prior statute,” Pension Benefit Guaranty Cor­poration v. LTV Corp., 496 U.S. 633, 650 (1990), reasoning that “‘[c]ongressional inaction lacks persuasive significance because several equally tenable inferences may be drawn from such inaction, including the inference that the existing legislation already incorporated the offered change.’” Cen­tral Bank of Denver, N. A. v. First Interstate Bank of Den­ver, N. A., 511 U.S. 164, 187 (1994). This case exemplifies the risk of relying on such legislative history. As we noted in United States v. Rodgers, 461 U. S., at 704, n. 31, some legislative history surrounding the 1954 amendment indi­cates that the House intended the amendment to be nothing more than a “clarification” of existing law, and that the Sen­ate rejected the amendment only because it found it “super­fluous.” See H. R. Rep. No. 1337, 83d Cong., 2d Sess., A406 (1954) (noting that the amendment would “clarif[y] the term ‘property and rights to property’ by expressly including therein the interest of the delinquent taxpayer in an estate by the entirety”); S. Rep. No. 1622, at 575 (“It is not clear what change in existing law would be made by the paren­thetical phrase. The deletion of the phrase is intended to continue the existing law”).

The same ambiguity that plagues the legislative history accompanies the common-law background of Congress’ en­actment of the tax lien statute. Respondent argues that Congress could not have intended the passage of the federal tax lien statute to alter the generally accepted rule that liens could not attach to entireties property. See Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104, 108 (1991) (“[W]here a common-law principle is well established...the courts may take it as given that Congress has legislated with an expectation that the principle will apply except ‘when a statutory purpose to the contrary is evident’”). The common-law rule was not so well established with respect to the application of a federal tax lien that we must assume that Congress considered the impact of its enactment on the question now before us. There was not much of a common-­law background on the question of the application of federal tax liens, as the first court of appeals cases dealing with the application of such a lien did not arise until the 1950’s. United States v. Hutcherson, 188 F. 2d 326 (CA8 1951); Raf­faele v. Granger, 196 F. 2d 620 (CA3 1952). This background is not sufficient to overcome the broad statutory language Congress did enact, authorizing the lien to attach to “all property and rights to property” a taxpayer might have.

We therefore conclude that respondent’s husband’s interest in the entireties property constituted “property” or “rights to property” for the purposes of the federal tax lien statute. We recognize that Michigan makes a different choice with respect to state law creditors: “[L]and held by husband and wife as tenants by entirety is not subject to levy under exe­cution on judgment rendered against either husband or wife alone.” Sanford v. Bertrau, 204 Mich. 244, 247, 169 N. W. 880, 881 (1918). But that by no means dictates our choice. The interpretation of 26 U.S.C. § 6321 is a federal question, and in answering that question we are in no way bound by state courts’ answers to similar questions involving state law. As we elsewhere have held, “‘exempt status under state law does not bind the federal collector.’” Drye v. United States, 528 U.S., at 59. See also Rodgers, supra, at 701 (clarifying that the Supremacy Clause “provides the underpinning for the Federal Government’s right to sweep aside state-created exemptions”).

V

We express no view as to the proper valuation of respond­ent’s husband’s interest in the entireties property, leaving this for the Sixth Circuit to determine on remand. We note, however, that insofar as the amount is dependent upon whether the 1989 conveyance was fraudulent, see post, at 290, n. 1 (Thomas, J., dissenting), this case is somewhat anomalous. The Sixth Circuit affirmed the District Court’s judgment that this conveyance was not fraudulent, and the Government has not sought certiorari review of that deter­mination. Since the District Court’s judgment was based on the notion that, because the federal tax lien could not attach to the property, transferring it could not constitute an attempt to evade the Government creditor, 65 F. Supp. 2d, at 657-659, in future cases, the fraudulent conveyance ques­tion will no doubt be answered differently.

The judgment of the United States Court of Appeals for the Sixth Circuit is accordingly reversed, and the case is remanded for proceedings consistent with this opinion.

It is so ordered.

Justice Scalia,

dissenting.

I join Justice Thomas’s dissent, which points out (to no relevant response from the Court) that a State’s decision to treat the marital partnership as a separate legal entity, whose property cannot be encumbered by the debts of its individual members, is no more novel and no more “artificial” than a State’s decision to treat the commercial partnership as a separate legal entity, whose property cannot be encum­bered by the debts of its individual members.

I write separately to observe that the Court nullifies (inso­far as federal taxes are concerned, at least) a form of prop­erty ownership that was of particular benefit to the stay-at-­home spouse or mother. She is overwhelmingly likely to be the survivor that obtains title to the unencumbered prop­erty; and she (as opposed to her business-world husband) is overwhelmingly unlikely to be the source of the individual indebtedness against which a tenancy by the entirety pro­tects. It is regrettable that the Court has eliminated a large part of this traditional protection retained by many States.

Justice Thomas,

dissenting.

The Court today allows the Internal Revenue Service (IRS) to reach proceeds from the sale of real property that did not belong to the taxpayer, respondent’s husband, Don Craft,1 because, in the Court’s view, he “possesse[d] individ­ual rights in the [tenancy by the entirety] estate sufficient to constitute ‘property’ or ‘rights to property’ for the purposes of the lien” created by 26 U.S.C. § 6321. Ante, at 276. The Court does not contest that the tax liability the IRS seeks to satisfy is Mr. Craft’s alone, and does not claim that, under Michigan law, real property held as a tenancy by the entirety belongs to either spouse individually. Nor does the Court suggest that the federal tax lien attaches to particular “rights to property” held individually by Mr. Craft. Rather, borrowing the metaphor of “property as a ‘bundle of sticks’—a collection of individual rights which, in certain combina­tions, constitute property,” ante, at 278, the Court proposes that so long as sufficient “sticks” in the bundle of “rights to property” “belong to” a delinquent taxpayer, the lien can attach as if the property itself belonged to the taxpayer, ante, at 285.

This amorphous construct ignores the primacy of state law in defining property interests, eviscerates the statutory dis­tinction between “property” and “rights to property” drawn by § 6321, and conflicts with an unbroken line of authority from this Court, the lower courts, and the IRS. Its applica­tion is all the more unsupportable in this case because, in my view, it is highly unlikely that the limited individual “rights to property” recognized in a tenancy by the entirety under Michigan law are themselves subject to lien. I would affirm the Court of Appeals and hold that Mr. Craft did not have “property” or “rights to property” to which the federal tax lien could attach.

I

Title 26 U.S.C. § 6321 provides that a federal tax lien at­taches to “all property and rights to property, whether real or personal, belonging to” a delinquent taxpayer. It is un­contested that a federal tax lien itself “creates no property rights but merely attaches consequences, federally defined, to rights created under state law.” United States v. Bess, 357 U.S. 51, 55 (1958) (construing the 1939 version of the federal tax lien statute). Consequently, the Government’s lien under § 6321 “cannot extend beyond the property inter­ests held by the delinquent taxpayer,” United States v. Rodgers, 461 U.S. 677, 690-691 (1983), under state law. Be­fore today, no one disputed that the IRS, by operation of § 6321, “steps into the taxpayer’s shoes,” and has the same rights as the taxpayer in property or rights to property sub­ject to the lien. B. Bittker & M. McMahon, Federal Income Taxation of Individuals ¶ 44.5[4][a] (2d ed. 1995 and 2000 Cum. Supp.) (hereinafter Bittker). I would not expand “‘the nature of the legal interest’” the taxpayer has in the property beyond those interests recognized under state law. Aquilino v. United States, 363 U.S. 509, 513 (1960) (citing Morgan v. Commissioner, 309 U.S. 78, 82 (1940)).

A

If the Grand Rapids property “belong[ed] to” Mr. Craft under state law prior to the termination of the tenancy by the entirety, the federal tax lien would have attached to the Grand Rapids property. But that is not this case. As the Court recognizes, pursuant to Michigan law, as under Eng­lish common law, property held as a tenancy by the entirety does not belong to either spouse, but to a single entity com­posed of the married persons. See ante, at 280-282. Nei­ther spouse has “any separate interest in such an estate.” Sanford v. Bertrau, 204 Mich. 244, 249, 169 N. W. 880, 882 (1918); see also Long v. Earle, 277 Mich. 505, 517, 269 N. W. 577, 581 (1936) (“Each [spouse] is vested with an entire title and as against the one who attempts alone to convey or in­cumber such real estate, the other has an absolute title”). An entireties estate constitutes an indivisible “sole tenancy.” See Budwit v. Herr, 339 Mich. 265, 272, 63 N. W. 2d 841, 844 (1954); see also Tyler v. United States, 281 U.S. 497, 501 (1930) (“[T]he tenants constitute a unit; neither can dispose of any part of the estate without the consent of the other; and the whole continues in the survivor”). Because Michi­gan does not recognize a separate spousal interest in the Grand Rapids property, it did not “belong” to either respond­ent or her husband individually when the IRS asserted its lien for Mr. Craft’s individual tax liability. Thus, the prop­erty was not property to which the federal tax lien could attach for Mr. Craft’s tax liability.

The Court does not dispute this characterization of Michi­gan’s law with respect to the essential attributes of the ten­ancy by the entirety estate. However, relying on Drye v. United States, 528 U.S. 49, 59 (1999), which in turn relied upon United States v. Irvine, 511 U.S. 224 (1994), and United States v. Mitchell, 408 U.S. 190 (1971), the Court suggests that Michigan’s definition of the tenancy by the entirety es­tate should be overlooked because federal tax law is not con­trolled by state legal fictions concerning property ownership. Ante, at 279. But the Court misapprehends the application of Drye to this case.

Drye, like Irvine and Mitchell before it, was concerned not with whether state law recognized “property” as belong­ing to the taxpayer in the first place, but rather with whether state laws could disclaim or exempt such property from federal tax liability after the property interest was cre­ated. Drye held only that a state-law disclaimer could not retroactively undo a vested right in an estate that the tax­payer already held, and that a federal lien therefore attached to the taxpayer’s interest in the estate. 528 U.S., at 61 (rec­ognizing that a disclaimer does not restore the status quo ante because the heir “determines who will receive the prop­erty—himself if he does not disclaim, a known other if he does”). Similarly, in Irvine, the Court held that a state law allowing an individual to disclaim a gift could not force the Court to be “struck blind” to the fact that the transfer of “property” or “property rights” for which the gift tax was due had already occurred; “state property transfer rules do not transfer into federal taxation rules.” 511 U.S., at 239-­240 (emphasis added). See also Mitchell, supra, at 204 (holding that right to renounce a marital interest under state law does not indicate that the taxpayer had no right to prop­erty before the renunciation).

Extending this Court’s “state law fiction” jurisprudence to determine whether property or rights to property exist under state law in the first place works a sea change in the role States have traditionally played in “creating and defin­ing” property interests. By erasing the careful line be­tween state laws that purport to disclaim or exempt prop­erty interests after the fact, which the federal tax lien does not respect, and state laws’ definition of property and prop­erty rights, which the federal tax lien does respect, the Court does not follow Drye, but rather creates a new federal common law of property. This contravenes the previously settled rule that the definition and scope of property is left to the States. See Aquilino, supra, at 513, n. 3 (recognizing unsoundness of leaving the definition of property interests to a nebulous body of federal law, “because it ignores the long-established role that the States have played in creating property interests and places upon the courts the task of attempting to ascertain a taxpayer’s property rights under an undefined rule of federal law”).

B

That the Grand Rapids property does not belong to Mr. Craft under Michigan law does not end the inquiry, how­ever, since the federal tax lien attaches not only to “prop­erty” but also to any “rights to property” belonging to the taxpayer. While the Court concludes that a laundry list of “rights to property” belonged to Mr. Craft as a tenant by the entirety,2 it does not suggest that the tax lien attached to any of these particular rights.3 Instead, the Court gathers these rights together and opines that there were sufficient sticks to form a bundle, so that “respondent’s husband’s in­terest in the entireties property constituted ‘property’ or ‘rights to property’ for the purposes of the federal tax lien statute.” Ante, at 288, 285.

But the Court’s “sticks in a bundle” metaphor collapses precisely because of the distinction expressly drawn by the statute, which distinguishes between “property” and “rights to property.” The Court refrains from ever stating whether this case involves “property” or “rights to property” even though § 6321 specifically provides that the federal tax lien attaches to “property” and “rights to property” “belonging to” the delinquent taxpayer, and not to an imprecise con­struct of “individual rights in the estate sufficient to consti­tute ‘property’ or ‘rights to property’ for the purposes of the lien.” Ante, at 276.4

Rather than adopt the majority’s approach, I would ask specifically, as the statute does, whether Mr. Craft had any particular “rights to property” to which the federal tax lien could attach. He did not.5 Such “rights to property” that have been subject to the § 6321 lien are valuable and “pecuni­ary,” i.e., they can be attached, and levied upon or sold by the Government.6 Drye, 528 U.S., at 58-60, and n. 7. With such rights subject to lien, the taxpayer’s interest has “rip­en[ed] into a present estate” of some form and is more than a mere expectancy, id., at 60,. n. 7, and thus the taxpayer has an apparent right “to channel that value to [another],” id., at 61.

In contrast, a tenant in a tenancy by the entirety not only lacks a present divisible vested interest in the property and control with respect to the sale, encumbrance, and transfer of the property, but also does not possess the ability to devise any portion of the property because it is subject to the oth­er’s indestructible right of survivorship. Rogers v. Rogers, 136 Mich. App. 125, 135-137, 356 N. W. 2d 288, 293-294 (1984). This latter fact makes the property significantly dif­ferent from community property, where each spouse has a present one-half vested interest in the whole, which may be devised by will or otherwise to a person other than the spouse. See 4 G. Thompson, Real Property § 37.14(a) (D. Thomas ed. 1994) (noting that a married person’s power to devise one-half of the community property is “consistent with the fundamental characteristic of community property”: “community ownership means that each spouse owns 50% of each community asset”).7 See also Drye, 528 U.S., at 61 (“[I]n determining whether a federal taxpayer’s state-law rights constitute ‘property’ or ‘rights to property,’ the important consideration is the breadth of the control the taxpayer could exercise over the property” (emphasis added, citation and brackets omitted)).

It is clear that some of the individual rights of a tenant in entireties property are primarily personal, dependent upon the taxpayer’s status as a spouse, and similarly not suscepti­ble to a tax lien. For example, the right to use the property in conjunction with one’s spouse and to exclude all others appears particularly ill suited to being transferred to an­other, see ibid., and to lack “exchangeable value,” id., at 56.

Nor do other identified rights rise to the level of “rights to property” to which a § 6321 lien can attach, because they represent, at most, a contingent future interest, or an “ex­pectancy” that has not “ripen[ed] into a present estate.” Id., at 60, n. 7 (“Nor do we mean to suggest that an expec­tancy that has pecuniary value and is transferable under state law would fall within § 6321 prior to the time it ripens into a present estate”). Cf. Bess, 357 U.S., at 55-56 (holding that no federal tax lien could attach to proceeds of the tax­payer’s life insurance policy because “[i]t would be anoma­lous to view as ‘property’ subject to lien proceeds never within the insured’s reach to enjoy”). By way of example, the survivorship right wholly depends upon one spouse out­living the other, at which time the survivor gains “substan­tial rights, in respect of the property, theretofore never en­joyed by [the] survivor.” Tyler, 281 U.S., at 503. While the Court explains that it is “not necessary to decide whether the right to survivorship alone would qualify as ‘property’ or ‘rights to property’” under § 6321, ante, at 285, the facts of this case demonstrate that it would not. Even assuming both that the right of survivability continued after the demise of the tenancy estate and that the tax lien could attach to such a contingent future right, creating a lienable interest upon the death of the nonliable spouse, it would not help the IRS here; respondent’s husband predeceased her in 1998, and there is no right of survivorship at issue in this case.

Similarly, while one spouse might escape the absolute limi­tations on individual action with respect to tenancy by the entirety property by obtaining the right to one-half of the property upon divorce, or by agreeing with the other spouse to sever the tenancy by the entirety, neither instance is an event of sufficient certainty to constitute a “right to prop­erty” for purposes of § 6321. Finally, while the federal tax lien could arguably have attached to a tenant’s right to any “rents, products, income, or profits” of real property held as tenants by the entirety, Mich. Comp. Laws Ann. § 557.71 (West 1988), the Grand Rapids property created no rents, products, income, or profits for the tax lien to attach to.

In any event, all such rights to property, dependent as they are upon the existence of the tenancy by the entirety estate, were likely destroyed by the quitclaim deed that sev­ered the tenancy. See n. 1, supra. Unlike a lien attached to the property itself, which would survive a conveyance, a lien attached to a “right to property” falls squarely within the maxim that “the tax collector not only steps into the taxpayer’s shoes but must go barefoot if the shoes wear out.” Bittker ¶ 44.5[4][a] (noting that “a state judgment termi­nating the taxpayer’s rights to an asset also extinguishes the federal tax lien attached thereto”). See also Elliott ¶ 9.09[3][d][i] (explaining that while a tax lien may attach to a taxpayer’s option on property, if the option terminates, the Government’s lien rights would terminate as well).

Accordingly, I conclude that Mr. Craft had neither “prop­erty” nor “rights to property” to which the federal tax lien could attach.

II

That the federal tax lien did not attach to the Grand Rap­ids property is further supported by the consensus among the lower courts. For more than 50 years, every federal court reviewing tenancies by the entirety in States with a similar understanding of tenancy by the entirety as Michigan has concluded that a federal tax lien cannot attach to such property to satisfy an individual spouse’s tax liability.8 This consensus is supported by the IRS’ consistent recognition, arguably against its own interest, that a federal tax lien against one spouse cannot attach to property or rights to property held as a tenancy by the entirety.9

That the Court fails to so much as mention this consensus, let alone address it or give any reason for overruling it, is puzzling. While the positions of the lower courts and the IRS do not bind this Court, one would be hard pressed to explain why the combined weight of these judicial and ad­ministrative sources—including the IRS’ instructions to its own employees—do not constitute relevant authority.

Finally, while the majority characterizes Michigan’s view that the tenancy by the entirety property does not belong to the individual spouses as a “state law fiction,” ante, at 276, our precedents, including Drye, 528 U.S., at 58-60, hold that state, not federal, law defines property interests. Owner­ship by “the marriage” is admittedly a fiction of sorts, but so is a partnership or corporation. There is no basis for ig­noring this fiction so long as federal law does not define prop­erty, particularly since the tenancy by the entirety property remains subject to lien for the tax liability of both tenants.

Nor do I accept the Court’s unsupported assumption that its holding today is necessary because a contrary result would “facilitat[e] abuse of the federal tax system.” Ante, at 285. The Government created this straw man, Brief for United States 30-32, suggesting that the property transfer from the tenancy by the entirety to respondent was somehow improper, see id., at 30-31, n. 20 (characterizing scope of “[t]he tax avoidance scheme sanctioned by the court of ap­peals in this case”), even though it chose not to appeal the lower court’s contrary assessment. But the longstanding consensus in the lower courts that tenancy by the entirety property is not subject to lien for the tax liability of one spouse, combined with the Government’s failure to adduce any evidence that this has led to wholesale tax fraud by mar­ried individuals, suggests that the Court’s policy rationale for its holding is simply unsound.

Just as I am unwilling to overturn this Court’s longstand­ing precedent that States define and create property rights and forms of ownership, Aquilino, 363 U.S., at 513, n. 3, I am equally unwilling to redefine or dismiss as fictional forms of property ownership that the State has recognized in favor of an amorphous federal common-law definition of property.

I respectfully dissent.

1

The Grand Rapids property was tenancy by the entirety property owned by Mr. and Mrs. Craft when the tax lien attached, but was conveyed by the Crafts to Mrs. Craft by quitclaim deed in 1989. That conveyance terminated the entirety estate. Mich. Comp. Laws Ann. § 557.101 (West 1988); see also United States v. Certain Real Property Located at 2525 Leroy Lane, 910 F. 2d 343, 351 (CA6 1990). The District Court and Court of Appeals both held that the transfer did not constitute a fraudulent con­veyance, a ruling the Government has not appealed. The IRS is undoubt­edly entitled to any proceeds that Mr. Craft received or to which he was entitled from the 1989 conveyance of the tenancy by the entirety property for $1; at that point the tenancy by the entirety estate was destroyed and at least half of the proceeds, or 50 cents, was “property” or “rights to property” “belonging to” Mr. Craft. By contrast, the proceeds that the IRS claims here are from Mrs. Craft’s 1992 sale of the property to a third party. At the time of the sale, she owned the property in fee simple, and accordingly Mr. Craft neither received nor was entitled to these funds.

2

The parties disagree as to whether Michigan law recognizes the “rights to property” identified by the Court as individual rights “belonging to” each tenant in entireties property. Without deciding a question better resolved by the Michigan courts, for the purposes of this case I will as­sume, arguendo, that Michigan law recognizes separate interests in these “rights to property.”

3

Nor does the Court explain how such “rights to property” survived the destruction of the tenancy by the entirety, although, for all intents and purposes, it acknowledges that such rights as it identifies exist by virtue of the tenancy by the entirety estate. Even Judge Ryan's concurrence in the Sixth Circuit’s first ruling in this matter is best read as making the Federal Government’s right to execute its lien dependent upon the factual finding that the conveyance was a fraudulent transaction. See 140 F. 3d 638, 648-649 (1998).

4

The Court’s reasoning that because a taxpayer has rights to property a federal tax lien can attach not only to those rights but also to the prop­erty itself could have far-reaching consequences. As illustration, in the partnership setting as elsewhere, the Government’s lien under § 6321 places the Government in no better position than the taxpayer to whom the property belonged: “[F]or example, the lien for a partner’s unpaid income taxes attaches to his interest in the firm, not to the firm’s assets.” Bittker ¶ 44.5[4][a]. Though partnership property currently is “not sub­ject to attachment or execution, except on a claim against the part­nership,” Rev. Rul. 73-24, 1973-1 Cum. Bull. 602; cf. United States v. Kaufman, 267 U.S. 408 (1925), under the logic of the Court’s opinion partnership property could be attached for the tax liability of an individ­ual partner. Like a tenant in a tenancy by the entirety, the partner has significant rights to use, enjoy, and control the partnership property in conjunction with his partners. I see no principled way to distinguish between the propriety of attaching the federal tax lien to partnership property to satisfy the tax liability of a partner, in contravention of cur­rent practice, and the propriety of attaching the federal tax lien to tenancy by the entirety property in order to satisfy the tax liability of one spouse, also in contravention of current practice. I do not doubt that a tax lien may attach to a partner’s partnership interest to satisfy his individual tax liability, but it is well settled that the lien does not, thereby, attach to property belonging to the partnership. The problem for the IRS in this case is that, unlike a partnership interest, such limited rights that Mr. Craft had in the Grand Rapids property are not the kind of rights to property to which a lien can attach, and the Grand Rapids property itself never “belong[ed] to” him under Michigan law.

5

Even such rights as Mr. Craft arguably had in the Grand Rapids prop­erty bear no resemblance to those to which a federal tax lien has ever attached. See W. Elliott, Federal Tax Collections, Liens, and Levies ¶¶ 9.09[3][a] — [f] (2d ed. 1995 and 2000 Cum. Supp.) (hereinafter Elliott) (listing examples of rights to property to which a federal tax lien attaches, such as the right to compel payment; the right to withdraw money from a bank account, or to receive money from accounts receivable; wages earned but not paid; installment payments under a contract of sale of real estate; annuity payments; a beneficiary’s rights to payment under a spendthrift trust; a liquor license; an easement; the taxpayer’s interest in a timeshare; options; the taxpayer’s interest in an employee benefit plan or individual retirement account).

6

See 26 U.S.C. §§6331, 6335-6336.

7

And it is similarly different from the situation in United States v. Rodgers, 461 U.S. 677 (1983), where the question was not whether a vested property interest in the family home to which the federal tax lien could attach “belong[ed] to” the taxpayer. Rather, in Rodgers, the only question was whether the federal tax lien for the husband’s tax liability could be foreclosed against the property under 26 U.S.C. § 7403, despite his wife’s homestead right under state law. See 461 U.S., at 701-703, and n. 31.

8

See IRS v. Gaster, 42 F. 3d 787, 791 (CA3 1994) (concluding that the IRS is not entitled to a lien on property owned as a tenancy by the entirety to satisfy the tax obligations of one spouse); Pitts v. United States, 946 F. 2d 1569, 1571-1572 (CA4 1991) (same); United States v. American Nat. Bank of Jacksonville, 255 F 2d 504, 507 (CA5), cert. denied, 358 U.S. 835 (1958) (same); Raffaele v. Granger, 196 F. 2d 620, 622-623 (CA3 1952) (same); United States v. Hutcherson, 188 F. 2d 326, 331 (CA8 1951) (ex­plaining that the interest of one spouse in tenancy by the entirety prop­erty “is not a right to property or property in any sense”); United States v. Nathanson, 60 F. Supp. 193, 194 (ED Mich. 1945) (finding no designation in the Federal Revenue Act for imposing tax upon property held by the entirety for taxes due from one person alone); Shaw v. United States, 94 F. Supp. 245, 246 (WD Mich. 1939) (recognizing that the nature of the estate under Michigan law precludes the tax lien from attaching to ten­ancy by the entirety property for the tax liability of one spouse). See also Benson v. United States, 442 F. 2d 1221, 1228 (CADC 1971) (recogniz­ing the Government’s concession that property owned by the parties as tenants by the entirety cannot be subjected to a tax lien for the debt of one tenant); Cole v. Cardoza, 441 F. 2d 1337, 1343 (CA6 1971) (noting Government concession that, under Michigan law, it had no valid claim against real property held by tenancy by the entirety).

9

See, e.g., Internal Revenue Manual § 5.8.4.2.3 (RIA 2002), available at WESTLAW, RIA-IRM database (Mar. 29, 2002) (listing “property owned as tenants by the entirety” as among the assets beyond the reach of the Government’s tax lien); id., § 5.6.1.2.3 (recognizing that a consensual lien may be appropriate “when the federal tax lien does not attach to the prop­erty in question. For example, an assessment exists against only one spouse and the federal tax lien does not attach to real property held as tenants by the entirety”); IRS Chief Counsel Advisory (Aug. 17, 2001) (noting that consensual liens, or mortgages, are to be used “as a means of securing the Government’s right to collect from property the assessment lien does not attach to, such as real property held as a tenancy by the entirety” (emphasis added)); IRS Litigation Bulletin No. 407 (Aug. 1994) (“Traditionally, the government has taken the view that a federal tax lien against a single debtor-spouse does not attach to property or rights to property held by both spouses as tenants by the entirety”); IRS Litigation Bulletin No. 388 (Jan. 1993) (explaining that neither the Department of Justice nor IRS chief counsel interpreted United States v. Rodgers, 461 U.S. 677 (1983), to mean that a federal tax lien against one spouse encum­bers his or her interest in entireties property, and noting that it “do[es] not believe the Department will again argue the broader interpretation of Rodgers,” which would extend the reach of the federal tax lien to property held by the entireties); Benson, supra, at 1223; Cardoza, supra, at 1343.

Court of Appeals of Kentucky.

No. 93-CA-0023-MR.

Garis Dale MARTIN and Peggy Martin, Appellants, v. Charles MARTIN and Mary Martin, Appellees.

June 24, 1994.

Before HOWERTON, JOHNSTONE and SCHRODER, JJ.

Lawrence R. Webster, Pikeville, for appel­lants.

Stephen L. Hogg, Stratton, May & Hays, Pikeville, for appellees.

JOHNSTONE, Judge.

Garis and Peggy Martin appeal from a judgment of the Pike Circuit Court which required them to pay rent to the cotenants of certain real estate. Reluctantly, we reverse.

Garis and Peggy own an undivided one-­eighth interest in a tract of land in Pike County. This interest was conveyed to Garis by his father, Charles Martin, in 1971. Appellees, Charles and Mary Martin, own a life estate in the undivided seven-eighths of the property for their joint lives, with remainder to appellants.

In 1982, Charles Martin improved a por­tion of the property and developed a four lot mobile home park which he and Mary rented. In July of 1990, Garis and Peggy moved their mobile home onto one of the lots. It is undisputed that Garis and Peggy expended no funds for the improvement or mainte­nance of the mobile home park, nor did they pay rent for the lot that they occupied.

In 1990, Garis and Peggy filed an action which sought an accounting of their claimed one-eighth portion of the net rent received by Charles and Mary from the lots. The accounting was granted, however, the judg­ment of the trial court required appellants to pay “reasonable rent” for their occupied lot. It is that portion of the judgment from which this appeal arises.

The sole issue presented is whether one cotenant is required to pay rent to another cotenant. Appellants argue that absent an agreement between cotenants, one cotenant occupying premises is not liable to pay rent to a co-owner. Appellees respond that a cotenant is obligated to pay rent when that cotenant occupies the jointly owned property to the exclusion of his co-owner.

Appellants and appellees own the subject property as tenants in common. The primary characteristic of a tenancy in com­mon is unity of possession by two or more owners. Each cotenant, regardless of the size of his fractional share of the property, has a right to possess the whole.

The prevailing view is that an occupying cotenant must account for outside rental in­come received for use of the land, offset by credits for maintenance and other appropri­ate expenses. See Barnes v. Kidwell, 245 Ky. 740, 54 S.W.2d 331 (1932). The trial judge correctly ordered an accounting and recovery of rent in the case sub judice.

However, the majority rule on the issue of whether one cotenant owes rent to another is that a cotenant is not liable to pay rent, or to account to other cotenants re­specting the reasonable value of the occupan­cy, absent an ouster or agreement to pay. 51 A.L.R.2d 413 § 8; see also Taylor v. Farmers and Gardeners Market Associa­tion, 295 Ky. 126, 173 S.W.2d 803 (1943).

The trial court relied erroneously on Smither v. Betts, Ky., 264 S.W.2d 255 (1954), for its conclusion that appellants were “obli­gated to pay seven-eighths of the reasonable rental for the use of the lot they occupy.” In Smither, one cotenant had exclusive posses­sion of jointly owned property by virtue of a lease with a court-appointed receiver and there was an agreement to pay rent. That clearly is not the case before us. There was no lease or any other agreement between the parties.

The appellees reason that the award of rent was proper upon the premise that Garis and Mary ousted their cotenants. While the proposition that a cotenant who has been ousted or excluded from property held jointly is entitled to rent is a valid one, we are convinced that such ouster must amount to exclusive possession of the entire jointly held property. We find support for this holding in Taylor, supra, in which the Court stated 178 S.W.2d at 807-08:

But, however this may be, running throughout all the books will be found two essential elements which must exist before the tenant sought to be charged is liable. These are: (a) That the tenant sought to be charged and who is claimed to be guilty of an ouster must assert exclusive claim to the property in himself, thereby necessari­ly including a denial of any interest or any right or title in the supposed ousted ten­ant; (b) he must give notice to this effect to the ousted tenant, or his acts must be so open and notorious, positive and assertive, as to place it beyond doubt that he is claiming the entire interest in the proper­ty. (Emphasis in original).

We conclude that appellants’ occupan­cy of one of the four lots did not amount to an ouster. To hold otherwise is to repudiate the basic characteristic of a tenancy in com­mon that each cotenant shares a single right to possession of the entire property and each has a separate claim to a fractional share. 4a Richard R. Powell, Powell on Real Prop­erty § 601 (1986).

Accordingly, the judgment of the Pike Cir­cuit Court is reversed as to the award of rent to the appellees.

All concur.

Angelo Delfino et al. v. Helen C. Vealencis

decision released July 22, 1980

Argued March 12

John R. Caruso, with whom, on the brief, was Susan M. Zajac, for the appellant (defendant).

Maxwell Heiman, with whom, on the brief, were Theodore M. Donovan and William J. Tracy, Jr., for the appellees (plaintiffs).

Cotter, C. J., Bogdanski, Peters, Healey and Parskey, Js.

Arthur H. Healey, J.

The central issue in this appeal is whether the Superior Court properly ordered the sale, pursuant to General Statutes § 52-500,1 of property owned by the plaintiffs and the defendant as tenants in common.

The plaintiffs, Angelo and William Delfino, and the defendant, Helen C. Vealencis, own, as tenants in common, real property located in Bristol, Con­necticut. The property consists of an approximately 20.5 acre parcel of land and the dwelling of the defendant thereon.2 The plaintiffs own an undi­vided 99/144 interest in the property, and the defendant owns a 45/144 interest. The defendant occupies the dwelling and a portion of the land, from which she operates a rubbish and garbage removal business.3 Apparently, none of the parties is in actual possession of the remainder of the prop­erty. The plaintiffs, one of whom is a residential developer, propose to develop the property, upon partition, into forty-five residential building lots.

In 1978, the plaintiffs brought an action in the trial court seeking a partition of the property by sale with a division of the proceeds according to the parties’ respective interests.4 The defendant moved for a judgment of in-kind partition5 and the appointment of a committee to conduct said parti­tion. The trial court, after a hearing, concluded that a partition in kind could not be had without “material injury” to the respective rights of the parties, and therefore ordered that the property be sold at auction by a committee and that the proceeds be paid into the court for distribution to the parties.

On appeal, the defendant claims essentially that the trial court’s conclusion that the parties’ inter­ests would best be served by a partition by sale is not supported by the findings of subordinate facts, and that the court improperly considered certain factors in arriving at that conclusion. In addition, the defendant directs a claim of error to the court’s failure to include in its findings of fact a paragraph of her draft findings.

General Statutes § 52-4956 authorizes courts of equitable jurisdiction to order, upon the complaint of any interested person, the physical partition of any real estate held by tenants in common, and to appoint a committee for that purpose. 7 When, how­ever, in the opinion of the court a sale of the jointly owned property “will better promote the interests of the owners,” the court may order such a sale under § 52-500.8 See Kaiser v. Second National Bank, 123 Conn. 248, 256, 193 A. 761 (1937); John­son v. Olmsted, 49 Conn. 509, 517 (1882).

It has long been the policy of this court, as well as other courts, to favor a partition in kind over a partition by sale. See Harrison v. International Silver Co., 78 Conn. 417, 420, 62 A. 342 (1905); Johnson v. Olmsted, supra; 2 American Law of Property, Partition § 6.26, pp. 112-14; 4A Powell, Real Property 612, p. 650; 59 Am. Jur. 2d, Partition § 118, pp. 864-65; 68 C.J.S., Partition § 125. The first Connecticut statute that provided for an absolute right to partition by physical divi­sion was enacted in 1720; Statutes, 1796, p. 258; the substance of which remains virtually unchanged today.9 Due to the possible impracticality of actual division, this state, like others, expanded the right to partition to allow a partition by sale under cer­tain circumstances.10 See Penfield v. Jarvis, 175 Conn. 463, 470-71, 399 A.2d 1280 (1978); see also Restatement, 2 Property c. 11, pp. 658-61. The early decisions of this court that considered the partition-by-sale statute emphasized that “[t]he statute giving the power of sale introduces...no new principles; it provides only for an emergency, when a division cannot be well made, in any other way. The Earl of Clarendon v. Hornby, 1 P. Wms., 446.4 Kent’s Com., 365.” Richardson v. Monson, 23 Conn. 94, 97 (1854); see Penfield v. Jarvis, supra, 471; Harrison v. International Silver Co., 78 Conn. 417, 420, 62 A. 342 (1905); Vail v. Hammond, 60 Conn. 374, 379, 22 A. 954 (1891). The court later expressed its reason for preferring partition in kind when it stated: “[A] sale of one’s property without his consent is an extreme exercise of power war­ranted only in clear cases.” Ford v. Kirk, 41 Conn. 9, 12 (1874). See also 59 Am. Jur. 2d, Partition § 118, p. 865. Although under General Statutes § 52-500 a court is no longer required to order a partition in kind even in cases of extreme difficulty or hardship; see Scovil v. Kennedy, 14 Conn. 349, 360-61 (1841); it is clear that a partition by sale should be ordered only when two conditions are satisfied: (1) the physical attributes of the land are such that a partition in kind is impracticable or inequitable; Johnson v. Olmsted, supra; and (2) the interests of the owners would better be promoted by a partition by sale. Kaiser v. Second National Bank, supra; see Gould v. Rosenfeld, 178 Conn. 503, 423 A.2d 146 (1979). Since our law has for many years presumed that a partition in kind would be in the best interests of the owners, the burden is on the party requesting a partition by sale to demonstrate that such a sale would better promote the owners’ interests. Accord, 4A Powell, Real Property ¶ 612, p. 651; 59 Am. Jur. 2d, Parti­tion § 118, p. 865.

The defendant claims in effect that the trial court’s conclusion that the rights of the parties would best be promoted by a judicial sale is not supported by the findings of subordinate facts. We agree.

Under the test set out above, the court must first consider the practicability of physically partitioning the property in question. The trial court concluded that due to the situation and location of the parcel of land, the size and area of the property, the physi­cal structure and appurtenances on the property, and other factors,11 a physical partition of the prop­erty would not be feasible. An examination of the subordinate findings of facts and the exhibits, how­ever, demonstrates that the court erred in this respect.

It is undisputed that the property in question con­sists of one 20.5 acre parcel, basically rectangular in shape, and one dwelling, located at the extreme western end of the property. Two roads, Dino Road and Lucien Court, abut the property and another, Birch Street, provides access through use of a right-of-way. Unlike cases where there are numer­ous fractional owners of the property to be par­titioned, and the practicability of a physical division is therefore drastically reduced; see, e.g., Penfield v. Jarvis, 175 Conn. 463, 464-65, 399 A.2d 1280 (1978); Lyon v. Wilcox, 98 Conn. 393, 394-95, 119 A. 361 (1923); Candee v. Candee, 87 Conn. 85, 89-90, 86 A. 758 (1913); in this case there are only two competing ownership interests: the plaintiffs’ undi­vided 99/144 interest and the defendant’s 45/144 interest. These facts, taken together, do not sup­port the trial court’s conclusion that a physical par­tition of the property would not be “feasible” in this case. Instead, the above facts demonstrate that the opposite is true: a partition in kind clearly would be practicable under the circumstances of this case.

Although a partition in kind is physically prac­ticable, it remains to be considered whether a par­tition in kind would also promote the best interests of the parties. In order to resolve this issue, the consequences of a partition in kind must be com­pared with those of a partition by sale.

The trial court concluded that a partition in kind could not be had without great prejudice to the parties since the continuation of the defendant’s business would hinder or preclude the development of the plaintiffs’ parcel for residential purposes, which the trial court concluded was the highest and best use of the property. The court’s concern over the possible adverse economic effect upon the plain­tiffs’ interest in the event of a partition in kind was based essentially on four findings: (1) approval by the city planning commission for subdivision of the parcel would be difficult to obtain if the defend­ant continued her garbage hauling business; (2) lots in a residential subdivision might not sell, or might sell at a lower price, if the defendant’s busi­ness continued; (3) if the defendant were granted the one-acre parcel,12 on which her residence is situ­ated and on which her business now operates, three of the lots proposed in the plaintiffs’ plan to sub­divide the property would have to be consolidated and would be lost; and (4) the proposed extension of one of the neighboring roads would have to be rerouted through one of the proposed building lots if a partition in kind were ordered. The trial court also found that the defendant’s use of the portion of the property that she occupies is in violation of existing zoning regulations. The court presumably inferred from this finding that it is not likely that the defendant will be able to continue her rubbish hauling operations from this property in the future. The court also premised its forecast that the plan­ning commission would reject the plaintiffs’ sub­division plan for the remainder of the property on the finding that the defendant’s use was invalid. These factors basically led the trial court to con­clude that the interests of the parties would best be protected if the land were sold as a unified unit for residential subdivision development and the proceeds of such a sale were distributed to the par­ties.

Before we consider whether these reasons are sufficient as a matter of law to overcome the prefer­ence for partition in kind that has been expressed in the applicable statutes and our opinions, we address first the defendant’s assignment of error directed to the finding of subordinate facts relating to one of these reasons. The defendant claims that the trial court erred in finding that the defendant’s use of a portion of the property is in violation of the existing zoning regulations, and in refusing to find that such use is a valid nonconforming use. The plaintiffs properly point out, however, that the defendant failed to demonstrate that the paragraph of the draft finding that recites that the defendant’s use is nonconforming was either admitted or undis­puted by the plaintiffs. An examination of that portion of the parties’ briefs directed to this issue discloses that, for some unexplained reason, the applicable zoning regulations and the date of their enactment were never introduced into evidence at the hearing below. Instead, the parties introduced only inconclusive and hearsay testimony to estab­lish their respective positions on this issue. This deficiency in the evidence cuts both ways, however, and requires us to conclude that the particular par­agraph of the defendant’s draft finding cannot be added to the finding and that the court’s finding in this regard must be stricken as unsupported by suffi­cient competent evidence. We are left, then, with an unassailed finding that the defendant’s family has operated a “garbage business” on the premises since the 1920s and that the city of Bristol has granted the defendant the appropriate permits and licenses each year to operate her business. There is no indication that this practice will not continue in the future.

Our resolution of this issue makes it clear that any inference that the defendant would probably be unable to continue her rubbish hauling activity on the property in the future is unfounded. We also conclude that the court erred in concluding that the city’s planning commission would probably not approve a subdivision plan relating to the remainder of the property. Any such forecast must be care­fully scrutinized as it is difficult to project what a public body will decide in any given matter. See Rushchak v. West Haven, 167 Conn. 564, 569, 356 A.2d 104 (1975). In this case, there was no sub­stantial evidence to support a conclusion that it was reasonably probable that the planning commis­sion would not approve a subdivision plan for the remainder of the property. Cf. Budney v. Ives, 156 Conn. 83, 90, 239 A.2d 482 (1968). Moreover, there is no suggestion in the statute relating to subdivi­sion approval; see General Statutes § 8-25; that the undeveloped portion of the parcel in issue, which is located in a residential neighborhood, could not be the subject of an approved subdivision plan not­withstanding the nearby operation of the defend­ant’s business. The court’s finding indicates that only garbage trucks and dumpsters are stored on the property; that no garbage is brought there; and that the defendant’s business operations involve “mostly containerized . . . dumpsters, a contempo­rary development in technology which has substan­tially reduced the odors previously associated with the rubbish and garbage hauling industry.” These facts do not support the court’s speculation that the city’s planning commission would not approve a subdivision permit for the undeveloped portion of the parties’ property. See Rogers Co. v. F. W. Woolworth, 161 Conn. 6, 12, 282 A.2d 882 (1971); White v. Herbst, 128 Conn. 659, 661, 25 A.2d 68 (1942).

The court’s remaining observations relating to the effect of the defendant’s business on the probable fair market value of the proposed residential lots, the possible loss of building lots to accommodate the defendant’s business13 and the rerouting of a proposed subdivision road, which may have some validity, are not dispositive of the issue. It is the interests of all of the tenants in common that the court must consider; see Lyon v. Wilcox, 98 Conn. 393, 395-96, 119 A. 361 (1923); 59 Am. Jur. 2d, Par­tition § 118, p. 865; and not merely the economic gain of one tenant, or a group of tenants. The trial court failed to give due consideration to the fact that one of the tenants in common has been in actual and exclusive possession of a portion of the prop­erty for a substantial period of time; that the tenant has made her home on the property; and that she derives her livelihood from the operation of a busi­ness on this portion of the property, as her family before her has for many years. A partition by sale would force the defendant to surrender her home and, perhaps, would jeopardize her livelihood. It is under just such circumstances, which include the demonstrated practicability of a physical division of the property, that the wisdom of the law’s prefer­ence for partition in kind is evident.

As this court has many times stated, conclusions that violate “law, logic or reason or are inconsistent with the subordinate facts” cannot stand. Russo v. East Hartford, 179 Conn. 250, 255, 425 A.2d 1282 (1979); Connecticut Coke Co. v. New Haven, 169 Conn. 663, 675, 364 A.2d 178 (1975). Since the property in this case may practicably be physically divided, and since the interests of all owners will better be promoted if a partition in kind is ordered, we conclude that the trial court erred in ordering a partition by sale, and that, under the facts as found, the defendant is entitled to a parti­tion of the property in kind.

There is error, the judgment is set aside and the case is remanded for further proceedings not incon­sistent with this opinion.

In this opinion the other judges concurred.

1

General Statutes § 52-500 states: “Sale of real or personal property owned by two or more. Any court of equitable jurisdic­tion may, upon the complaint of any person interested, order the sale of any estate, real or personal, owned by two or more persons, when, in the opinion of the court, a sale will better promote the interests of the owners. The provisions of this section shall extend to and include land owned by two or more persons, when the whole or a part of such land is vested in any person for life with remainder to his heirs, general or special, or, on failure of such heirs, to any other person, whether the same, or any part thereof, is held in trust or otherwise. A conveyance made in pursuance of a decree ordering a sale of such land shall vest the title in the purchaser thereof, and shall bind the person entitled to the life estate and his legal heirs and any other person having a remainder interest in the lands; but the court passing such decree shall make such order in relation to the investment of the avails of such sale as it deems necessary for the security of all persons having any interest in such land.”

2

The 20.5 acre parcel is backland to Birch Street and is connected to Birch Street by a right-of-way.

3

The defendant’s business functions on the property consist of the overnight parking, repair and storage of trucks, including refuse trucks, the repair, storage and cleaning of dumpsters, the storage of tools, and general office work. No refuse is actually deposited on the property.

4

The plaintiffs originally asked, in the alternative, for a physical partition, but later moved for a judgment of partition by sale.

5

Such a partition is authorized by General Statutes § 52-495 which states: “Partition of joint and common estates. Courts having jurisdiction of actions for equitable relief may, upon the complaint of any person interested, order partition of any real estate held in joint tenancy, tenancy in common or coparcenary, and may appoint a committee for that purpose, and may in like manner make partition of any real estate held by tenants in tail; and decrees aparting entailed estates shall bind the parties and all per­sons who thereafter claim title to such estate as heirs of their bodies.”

6

See footnote 5, supra.

7

If the physical partition results in unequal shares, a money award can be made from one tenant to another to equalize the shares. 4A Powell, Real Property ¶ 612, pp. 653-54; 2 American Law of Prop­erty, Partition § 6.26, p. 113.

8

See footnote 1, supra.

9

The 3720 statute; Statutes, 1796, p. 258; read in relevant part: “That all Persons having or holding; or that shall at any Time here­after have or hold any Lands, Tenements, or Hereditaments as Coparcerners, Joint-Tenants, or Tenants in Common, may be com­pelled by Writ of Partition to divide the same, where the Partners cannot agree to make Partition among themselves.”

10

Connecticut’s statute was passed in 1844. Public Acts 1844, e. XIII.

11

These other factors included the present use and the expected continued use by the defendant of the property, the property’s zoning classification, and the plaintiffs’ proposed subdivision plans. We consider these factors later in the opinion.

12

We express no opinion as to whether such a division represents the defendant’s fractional interest in the property.

13

It should be noted in this regard that a partition in kind would result in a physical division of the land according to the parties’ respective interests. The defendant would, therefore, not obtain any property in excess of her beneficial share of the parties’ concurrent estates.

(No. 59515.

WILLIAM HARMS, Appellee, v. CHARLES D. SPRA­GUE, Indiv. and as Ex’r, et al., Appellants.

Opinion filed November 30, 1984.

—Rehearing denied February 1, 1985.

Charles E. McNeeley, of Jacksonville, for appellant Charles D. Sprague.

Robert H. Mehrhoff, of Carrollton, for appellants Carl T. Simmons and Mary E. Simmons.

James W. Day, of White Hall, for appellee.

JUSTICE MORAN

delivered the opinion of the court.

Plaintiff, William H. Harms, filed a complaint to quiet title and for declaratory judgment in the circuit court of Greene County. Plaintiff had taken title to certain real estate with his brother John R. Harms, as a joint tenant, with full right of survivorship. The plaintiff named, as a defendant, Charles D. Sprague, the executor of the es­tate of John Harms and the devisee of all the real and personal property of John Harms. Also named as defendants were Carl T. and Mary E. Simmons, alleged mortgagees of the property in question. Defendant Spra­gue filed a counterclaim against plaintiff, challenging plaintiff’s claim of ownership of the entire tract of prop­erty and asking the court to recognize his (Sprague’s) in­terest as a tenant in common, subject to a mortgage lien. At issue was the effect the granting of a mortgage by John Harms had on the joint tenancy. Also at issue was whether the mortgage survived the death of John Harms as a lien against the property.

The trial court held that the mortgage given by John Harms to defendants Carl and Mary Simmons severed the joint tenancy. Further, the court found that the mort­gage survived the death of John Harms as a lien against the undivided one-half interest in the property which passed to Sprague by and through the will of the de­ceased. The appellate court reversed, finding that the mortgage given by one joint tenant of his interest in the property does not sever the joint tenancy. Accordingly, the appellate court held that plaintiff, as the surviving joint tenant, owned the property in its entirety, unen­cumbered by the mortgage lien. (119 Ill. App. 3d 503.) Defendant Sprague filed a petition for leave to appeal in this court. (87 Ill. 2d R. 315.) Subsequently, defendants Carl and Mary Simmons petitioned this court to supple­ment Sprague’s petition for leave to appeal. That motion was granted and the petition for leave to appeal was al­lowed.

Two issues are raised on appeal: (1) Is a joint tenancy severed when less than all of the joint tenants mortgage their interest in the property? and (2) Does such a mort­gage survive the death of the mortgagor as a lien on the property?

A review of the stipulation of facts reveals the fol­lowing. Plaintiff, William Harms, and his brother John Harms, took title to real estate located in Roodhouse, on June 26, 1973, as joint tenants. The warranty deed me­morializing this transaction was recorded on June 29, 1973, in the office of the Greene County recorder of deeds.

Carl and Mary Simmons owned a lot and home in Roodhouse. Charles Sprague entered into an agreement with the Simmonses whereby Sprague was to purchase their property for $25,000. Sprague tendered $18,000 in cash and signed a promissory note for the balance of $7,000. Because Sprague had no security for the $7,000, he asked his friend, John Harms, to co-sign the note and give a mortgage on his interest in the joint tenancy property. Harms agreed, and on June 12, 1981, John Harms and Charles Sprague, jointly and severally, exe­cuted a promissory note for $7,000 payable to Carl and Mary Simmons. The note states that the principal sum of $7,000 was to be paid from the proceeds of the sale of John Harms’ interest in the joint tenancy property, but in any event no later than six months from the date the note was signed. The note reflects that five monthly in­terest payments had been made, with the last payment recorded November 6, 1981. In addition, John Harms ex­ecuted a mortgage, in favor of the Simmonses, on his undivided one-half interest in the joint tenancy property, to secure payment of the note. William Harms was un­aware of the mortgage given by his brother.

John Harms moved from his joint tenancy property to the Simmons property which had been purchased by Charles Sprague. On December 10, 1981, John Harms died. By the terms of John Harms’ will, Charles Sprague was the devisee of his entire estate. The mortgage given by John Harms to the Simmonses was recorded on De­cember 29,1981.

Prior to the appellate court decision in the instant case (119 Ill. App. 3d 503) no court of this State had di­rectly addressed the principal question we are con­fronted with herein—the effect of a mortgage, executed by less than all of the joint tenants, on the joint tenancy. Nevertheless, there are numerous cases which have con­sidered the severance issue in relation to other circum­stances surrounding a joint tenancy. All have necessarily focused on the four unities which are fundamental to both the creation and the perpetuation of the joint ten­ancy. These are the unities of interest, title, time, and possession. (Jackson v. O’Connell (1961), 23 Ill. 2d 52, 55; Tindall v. Yeats (1946), 392 Ill. 502, 507.) The volun­tary or involuntary destruction of any of the unities by one of the joint tenants will sever the joint tenancy. Van Antwerp v. Horan (1945), 390 Ill. 449, 451.

In a series of cases, this court has considered the ef­fect that judgment liens upon the interest of one joint tenant have on the stability of the joint tenancy. In Peo­ples Trust & Savings Bank v. Haas (1927), 328 Ill. 468, the court found that a judgment lien secured against one joint tenant did not serve to extinguish the joint tenancy. As such, the surviving joint tenant “succeeded to the ti­tle in fee to the whole of the land by operation of law.” 328 Ill. 468, 471.

Citing to Haas for this general proposition, the court in Van Antwerp v. Horan (1945), 390 Ill. 449, extended the holding in Haas to the situation where a levy is made under execution upon the interest of the debtor joint tenant. The court found that the levy was “not such an act as can be said to have the effect of a divesti­ture of title *** [so as to destroy the] identity of interest or of any other unity which must occur before *** the estate of joint tenancy has been severed and destroyed.” 390 Ill. 449, 455.

In yet another case involving the attachment of a judgment lien upon the interest of a joint tenant, Jack­son v. Lacey (1951), 408 Ill. 530, the court held that the estate of joint tenancy had not been destroyed. As in Van Antwerp, the judgment creditor had levied on the interest of the joint tenant debtor. In addition, that in­terest was sold by the bailiff of the municipal court to the other joint tenant, who died intestate before the time of redemption expired. While the court recognized that a conveyance, even if involuntary, destroys the unity of ti­tle and severs the joint tenancy, it held that there would be no conveyance until the redemption period had ex­pired without a redemption. As such, title was not as yet divested and the estate in joint tenancy was unaltered.

Clearly, this court adheres to the rule that a lien on a joint tenant’s interest in property will not effectuate a severance of the joint tenancy, absent the conveyance by a deed following the expiration of a redemption period. (See Johnson v. Muntz (1936), 364 Ill. 482.) It follows, therefore, that if Illinois perceives a mortgage as merely a lien on the mortgagor’s interest in property rather than a conveyance of title from mortgagor to mortgagee, the execution of a mortgage by a joint tenant, on his in­terest in the property, would not destroy the unity of ti­tle and sever the joint tenancy.

Early cases in Illinois, however, followed the title the­ory of mortgages. In 1900, this court recognized the common law precept that a mortgage was a conveyance of a legal estate vesting title to the property in the mort­gagee. (Lightcap v. Bradley (1900), 186 Ill. 510, 519.) Consistent with this title theory of mortgages, therefore, there are many cases which state, in dicta, that a joint tenancy is severed by one of the joint tenants mortgag­ing his interest to a stranger. (Lawler v. Byrne (1911), 252 Ill. 194, 196; Hardin v. Wolf (1925), 318 Ill. 48, 59; Partridge v. Berliner (1927), 325 Ill. 253, 258-59; Van Antwerp v. Horan (1945), 390 Ill. 449, 453; Tindall v. Yeats (1946), 392 Ill. 502, 511; Illinois Public Aid Com. v. Stille (1958), 14 Ill. 2d 344, 353 (personal property).) Yet even the early case of Lightcap v. Bradley, cited above, recognized that the title held by the mortgagee was for the limited purpose of protecting his interests. The court went on to say that “the mortgagor is the owner for every other purpose and against every other person. The title of the mortgagee is anomalous, and exists only between him and the mortgagor ***.” Light­cap v. Bradley (1900), 186 Ill. 510, 522-23.

Because our cases had early recognized the unique and narrow character of the title that passed to a mort­gagee under the common law title theory, it was not a drastic departure when this court expressly character­ized the execution of a mortgage as a mere lien in Kling v. Ghilarducci (1954), 3 Ill. 2d 455. In Kling, the court was confronted with the question of when a separation of title, necessary to create an easement by implication, had occurred. The court found that title to the property was not separated with the execution of a trust deed but rather only upon execution and delivery of a master’s deed. The court stated:

“In some jurisdictions the execution of a mortgage is a severance, in others, the execution of a mortgage is not a severance. In Illinois the giving of a mortgage is not a separation of title, for the holder of the mortgage takes only a lien thereunder. After foreclosure of a mortgage and until delivery of the master’s deed under the foreclo­sure sale, purchaser acquires no title to the land either le­gal or equitable. Title to land sold under mortgage fore­closure remains in the mortgagor or his grantee until the expiration of the redemption period and conveyance by the master’s deed.” 3 Ill. 2d 455, 460.

Kling and later cases rejecting the title theory (De­partment of Transportation v. New Century Engineer­ing & Development Corp. (1983), 97 Ill. 2d 343; Kerri­gan v. Unity Savings Association (1974), 58 Ill. 2d 20; Mutual Life Insurance Co. of New York v. Chambers (1980), 88 Ill. App. 3d 952; Commercial Mortgage & Fi­nance Co. v. Woodcock Construction Co. (1964), 51 Ill. App. 2d 61) do not involve the severance of joint tenan­cies. As such, they have not expressly disavowed the dicta of joint tenancy cases which have stated that the act of mortgaging by one joint tenant results in the sev­erance of the joint tenancy. We find, however, that im­plicit in Kling and our more recent cases which follow the lien theory of mortgages is the conclusion that a joint tenancy is not severed when one joint tenant exe­cutes a mortgage on his interest in the property, since the unity of title has been preserved. As the appellate court in the instant case correctly observed: “If giving a mortgage creates only a lien, then a mortgage should have the same effect on a joint tenancy as a lien created in other ways.” (119 Ill. App. 3d 503, 507.) Other juris­dictions following the lien theory of mortgages have reached the same result. People v. Nogarr (1958), 164 Cal. App. 2d 591, 330 P.2d 858; D.A.D., Inc. v. Moring (Fla. App. 1969), 218 So. 2d 451; American National Bank & Trust Co. v. McGinnis (Okla. 1977), 571 P.2d 1198; Brant v. Hargrove (Ariz. Ct. App. 1981), 129 Ariz. 475, 632 P.2d 978.

A joint tenancy has been defined as “a present estate in all the joint tenants, each being seized of the whole ***.” (Partridge v. Berliner (1927), 325 Ill. 253, 257.) An inherent feature of the estate of joint tenancy is the right of survivorship, which is the right of the last survi­vor to take the whole of the estate. (In re Estate of Al­pert (1983), 95 Ill. 2d 377, 381; Bonczkowski v. Ku­charski (1958), 13 Ill. 2d 443, 451.) Because we find that a mortgage given by one joint tenant of his interest in the property does not sever the joint tenancy, we hold that the plaintiff’s right of survivorship became opera­tive upon the death of his brother. As such plaintiff is now the sole owner of the estate, in its entirety.

Further, we find that the mortgage executed by John Harms does not survive as a lien on plaintiff’s property. A surviving joint tenant succeeds to the share of the de­ceased joint tenant by virtue of the conveyance which created the joint tenancy, not as the successor of the deceased. (In re Estate of Alpert (1983), 95 Ill. 2d 377, 381.) The property right of the mortgaging joint tenant is extinguished at the moment of his death. While John Harms was alive, the mortgage existed as a lien on his interest in the joint tenancy. Upon his death, his interest ceased to exist and along with it the lien of the mortgage. (Merchants National Bank v. Olson (1975), 27 Ill. App. 3d 432, 434.) Under the circumstances of this case, we would note that the mortgage given by John Harms to the Simmonses was only valid as between the original parties during the lifetime of John Harms since it was unrecorded. (Ill. Rev. Stat. 1981, ch. 30, par. 29; 27 Ill. L. & Prac. Mortgages sec. 65 (1956).) In addition, record­ing the mortgage subsequent to the death of John Harms was a nullity. As we stated above, John Harms’ property rights in the joint tenancy were extinguished when he died. Thus, he no longer had a property interest upon which the mortgage lien could attach.

In their petition to supplement defendant Sprague’s petition for leave to appeal, the Simmonses argue that the application of section 20—19 of the Probate Act of 1975 (Ill. Rev. Stat. 1981, ch. 110½, par. 20—19) to the facts of this case would mandate a finding that their mortgage on the subject property remains as a valid en­cumbrance in the hands of the surviving joint tenant. Section 20—19 reads in relevant part:

“(a) When any real estate or leasehold estate in real estate subject to an encumbrance, or any beneficial inter­est under a trust of real estate or leasehold estate in real estate subject to an encumbrance, is specifically be­queathed or passes by joint tenancy with right of survi­vorship or by the terms of a trust agreement or other nontestamentary instrument, the legatee, surviving ten­ant or beneficiary to whom the real estate, leasehold es­tate or beneficial interest is given or passes, takes it sub­ject to the encumbrance and is not entitled to have the indebtedness paid from other real or personal estate of the decedent.” (Ill. Rev. Stat. 1981, ch. 110½, par. 20—19.)

While the Simmonses have maintained from the outset that their mortgage followed title to the property, they did not raise the applicability of section 20—19 of the Probate Act of 1975 at the trial level, and thus the issue is deemed waived. (Board of Education v. Kusper (1982), 92 Ill. 2d 333, 343; Snow v. Dixon (1977), 66 Ill. 2d 443, 453.) Moreover, because we have found that the lien of mortgage no longer exists against the property, sec­tion 20—19 is inapplicable, since plaintiff, as the surviving joint tenant, did not take the property subject to an en­cumbrance.

For the reasons stated herein, the judgment of the ap­pellate court is affirmed.

Judgment affirmed.

No. 00-1831.

UNITED STATES v. CRAFT

Decided April 17, 2002

Argued January 14, 2002 —

with whom Justice Thomas joins,

with whom Justice Stevens and Justice Scalia join,

Kent L. Jones argued the cause for the United States. With him on the briefs were Solicitor General Olson, Assist­ant Attorney General O'Connor, Deputy Solicitor General Wallace, David English Carmack, and Joan I. Oppenheimer.

Jeffrey S. Sutton argued the cause for respondent. With him on the briefs were Chad A. Readier, Jeffrey A. Moyer, and Michael Dubetz, Jr.

Justice O’Connor

delivered the opinion of the Court.

This case raises the question whether a tenant by the en­tirety possesses “property” or “rights to property” to which a federal tax lien may attach. 26 U.S.C. § 6321. Relying on the state law fiction that a tenant by the entirety has no separate interest in entireties property, the United States Court of Appeals for the Sixth Circuit held that such prop­erty is exempt from the tax lien. We conclude that, despite the fiction, each tenant possesses individual rights in the es­tate sufficient to constitute “property” or “rights to prop­erty” for the purposes of the lien, and reverse the judgment of the Court of Appeals.

I

In 1988, the Internal Revenue Service (IRS) assessed $482,446 in unpaid income tax liabilities against Don Craft, the husband of respondent Sandra L. Craft, for failure to file federal income tax returns for the years 1979 through 1986. App. to Pet. for Cert. 45a, 72a. When he failed to pay, a federal tax lien attached to “all property and rights to property, whether real or personal, belonging to” him. 26 U.S.C. § 6321.

At the time the lien attached, respondent and her husband owned a piece of real property in Grand Rapids, Michigan, as tenants by the entirety. App. to Pet. for Cert. 45a. After notice of the lien was filed, they jointly executed a quitclaim deed purporting to transfer the husband’s interest in the property to respondent for one dollar. Ibid. When respondent attempted to sell the property a few years later, a title search revealed the lien. The IRS agreed to release the lien and allow the sale with the stipulation that half of the net proceeds be held in escrow pending determination of the Government’s interest in the property. Ibid.

Respondent brought this action to quiet title to the escrowed proceeds. The Government claimed that its lien had attached to the husband’s interest in the tenancy by the en­tirety. It further asserted that the transfer of the property to respondent was invalid as a fraud on creditors. Id., at 46a-47a. The District Court granted the Government’s motion for summary judgment, holding that the federal tax lien attached at the moment of the transfer to respondent, which terminated the tenancy by the entirety and entitled the Government to one-half of the value of the property. No. 1:93-CV-306, 1994 WL 669680, *3 (WD Mich., Sept. 12, 1994).

Both parties appealed. The Sixth Circuit held that the tax lien did not attach to the property because under Michi­gan state law, the husband had no separate interest in prop­erty held as a tenant by the entirety. 140 F. 3d 638, 643 (1998). It remanded to the District Court to consider the Government’s alternative claim that the conveyance should be set aside as fraudulent. Id., at 644.

On remand, the District Court concluded that where, as here, state law makes property exempt from the claims of creditors, no fraudulent conveyance can occur. 65 F. Supp. 2d 651, 657-658 (WD Mich. 1999). It found, however, that respondent’s husband’s use of nonexempt funds to pay the mortgage on the entireties property, which placed them be­yond the reach of creditors, constituted a fraudulent act under state law, and the court awarded the IRS a share of the proceeds of the sale of the property equal to that amount. Id., at 659.

Both parties appealed the District Court’s decision, the Government again claiming that its lien attached to the husband’s interest in the entireties property. The Court of Appeals held that the prior panel’s opinion was law of the case on that issue. 233 F. 3d 358, 363-369 (CA6 2000). It also affirmed the District Court’s determination that the husband’s mortgage payments were fraudulent. Id., at 369-375.

We granted certiorari to consider the Government’s claim that respondent’s husband had a separate interest in the en­tireties property to which the federal tax lien attached. 533 U.S. 976 (2001).

II

Whether the interests of respondent’s husband in the prop­erty he held as a tenant by the entirety constitutes “property and rights to property” for the purposes of the federal tax lien statute, 26 U.S.C. § 6321, is ultimately a question of fed­eral law. The answer to this federal question, however, largely depends upon state law. The federal tax lien statute itself “creates no property rights but merely attaches conse­quences, federally defined, to rights created under state law.” United States v. Bess, 357 U.S. 51, 55 (1958); see also United States v. National Bank of Commerce, 472 U.S. 713, 722 (1985). Accordingly, “[w]e look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer’s state-delineated rights qualify as ‘property’ or ‘rights to property’ within the compass of the federal tax lien legislation.” Drye v. United States, 528 U.S. 49, 58 (1999).

A common idiom describes property as a “bundle of sticks”—a collection of individual rights which, in certain combinations, constitute property. See B. Cardozo, Para­doxes of Legal Science 129 (1928) (reprint 2000); see also Dickman v. Commissioner, 465 U.S. 330, 336 (1984). State law determines only which sticks are in a person’s bundle. Whether those sticks qualify as “property” for purposes of the federal tax lien statute is a question of federal law.

In looking to state law, we must be careful to consider the substance of the rights state law provides, not merely the labels the State gives these rights or the conclusions it draws from them. Such state law labels are irrelevant to the fed­eral question of which bundles of rights constitute property that may be attached by a federal tax lien. In Drye v. United States, supra, we considered a situation where state law allowed an heir subject to a federal tax lien to disclaim his interest in the estate. The state law also provided that such a disclaimer would “creat[e] the legal fiction” that the heir had predeceased the decedent and would correspond­ingly be deemed to have had no property interest in the es­tate. Id., at 53. We unanimously held that this state law fiction did not control the federal question and looked instead to the realities of the heir’s interest. We concluded that, despite the State’s characterization, the heir possessed a “right to property” in the estate—the right to accept the inheritance or pass it along to another—to which the federal lien could attach. Id., at 59-61.

III

We turn first to the question of what rights respondent’s husband had in the entireties property by virtue of state law. In order to understand these rights, the tenancy by the entirety must first be placed in some context.

English common law provided three legal structures for the concurrent ownership of property that have survived into modern times: tenancy in common, joint tenancy, and tenancy by the entirety. 1 G. Thompson, Real Property § 4.06(g) (D. Thomas ed. 1994) (hereinafter Thompson). The tenancy in common is now the most common form of concur­rent ownership. 7 R. Powell & P. Rohan, Real Property § 51.01[3] (M. Wolf ed. 2001) (hereinafter Powell). The com­mon law characterized tenants in common as each owning a separate fractional share in undivided property. Id., § 50.01[1]. Tenants in common may each unilaterally alien­ate their shares through sale or gift or place encumbrances upon these shares. They also have the power to pass these shares to their heirs upon death. Tenants in common have many other rights in the property, including the right to use the property, to exclude third parties from it, and to receive a portion of any income produced from it. Id., §§ 50.03-50.06.

Joint tenancies were the predominant form of concurrent ownership at common law, and still persist in some States today. 4 Thompson § 31.05. The common law characterized each joint tenant as possessing the entire estate, rather than a fractional share: “[J]oint-tenants have one and the same interest...held by one and the same undivided possession.” 2 W. Blackstone, Commentaries on the Laws of England 180 (1766). Joint tenants possess many of the rights enjoyed by tenants in common: the right to use, to exclude, and to enjoy a share of the property’s income. The main difference be­tween a joint tenancy and a tenancy in common is that a joint tenant also has a right of automatic inheritance known as “survivorship.” Upon the death of one joint tenant, that tenant’s share in the property does not pass through will or the rules of intestate succession; rather, the remaining ten­ant or tenants automatically inherit it. Id., at 183; 7 Powell § 51.01 [3]. Joint tenants’ right to alienate their individual shares is also somewhat different. In order for one tenant to alienate his or her individual interest in the tenancy, the estate must first be severed—that is, converted to a tenancy in common with each tenant possessing an equal fractional share. Id., § 51.04[1]. Most States allowing joint tenancies facilitate alienation, however, by allowing severance to auto­matically accompany a conveyance of that interest or any other overt act indicating an intent to sever. Ibid.

A tenancy by the entirety is a unique sort of concurrent ownership that can only exist between married persons. 4 Thompson § 33.02. Because of the common-law fiction that the husband and wife were one person at law (that person, practically speaking, was the husband, see J. Cribbet et al., Cases and Materials on Property 329 (6th ed. 1990)), Black­stone did not characterize the tenancy by the entirety as a form of concurrent ownership at all. Instead, he thought that entireties property was a form of single ownership by the marital unity. Orth, Tenancy by the Entirety: The Strange Career of the Common-Law Marital Estate, 1997 B. Y. U. L. Rev. 35, 38-39. Neither spouse was considered to own any individual interest in the estate; rather, it be­longed to the couple.

Like joint tenants, tenants by the entirety enjoy the right of survivorship. Also like a joint tenancy, unilateral alien­ation of a spouse’s interest in entireties property is typically not possible without severance. Unlike joint tenancies, however, tenancies by the entirety cannot easily be severed unilaterally. 4 Thompson § 33.08(b). Typically, severance requires the consent of both spouses, id., § 33.08(a), or the ending of the marriage in divorce, id., § 33.08(d). At com­mon law, all of the other rights associated with the entireties property belonged to the husband: as the head of the house­hold, he could control the use of the property and the exclu­sion of others from it and enjoy all of the income produced from it. Id., § 33.05. The husband’s control of the property was so extensive that, despite the rules on alienation, the common law eventually provided that he could unilaterally alienate entireties property without severance subject only to the wife’s survivorship interest. Orth, supra, at 40-41.

With the passage of the Married Women’s Property Acts in the late 19th century granting women distinct rights with respect to marital property, most States either abolished the tenancy by the entirety or altered it significantly. 7 Powell § 52.01[2]. Michigan’s version of the estate is typical of the modern tenancy by the entirety. Following Blackstone, Michigan characterizes its tenancy by the entirety as creat­ing no individual rights whatsoever: “It is well settled under the law of this State that one tenant by the entirety has no interest separable from that of the other....Each is vested with an entire title.” Long v. Earle, 277 Mich. 505, 517, 269 N. W. 577, 581 (1936). And yet, in Michigan, each tenant by the entirety possesses the right of survivorship. Mich. Comp. Laws Ann. § 554.872(g) (West Supp. 1997), recodified at § 700.2901(2)(g) (West Supp. Pamphlet 2001). Each spouse—the wife as well as the husband—may also use the property, exclude third parties from it, and receive an equal share of the income produced by it. See § 557.71 (West 1988). Neither spouse may unilaterally alienate or encumber the property, Long v. Earle, supra, at 517, 269 N. W., at 581; Rogers v. Rogers, 136 Mich. App. 125, 134, 356 N. W. 2d 288, 292 (1984), although this may be accomplished with mutual consent, Eadus v. Hunter, 249 Mich. 190, 228 N. W. 782 (1930). Divorce ends the tenancy by the en­tirety, generally giving each spouse an equal interest in the property as a tenant in common, unless the divorce de­cree specifies otherwise. Mich. Comp. Laws Ann. § 552.102 (West 1988).

In determining whether respondent’s husband possessed “property” or “rights to property” within the meaning of 26 U.S.C. § 6321, we look to the individual rights created by these state law rules. According to Michigan law, respond­ent’s husband had, among other rights, the following rights with respect to the entireties property: the right to use the property, the right to exclude third parties from it, the right to a share of income produced from it, the right of survivor-­ship, the right to become a tenant in common with equal shares upon divorce, the right to sell the property with the respondent’s consent and to receive half the proceeds from such a sale, the right to place an encumbrance on the property with the respondent’s consent, and the right to block respondent from selling or encumbering the property unilaterally.

IV

We turn now to the federal question of whether the rights Michigan law granted to respondent’s husband as a tenant by the entirety qualify as “property” or “rights to property” under § 6321. The statutory language authorizing the tax lien “is broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have.” United States v. National Bank of Commerce, 472 U.S., at 719-720. “Stronger language could hardly have been selected to reveal a purpose to assure the collection of taxes.” Glass City Bank v. United States, 326 U.S. 265, 267 (1945). We conclude that the husband’s rights in the entireties property fall within this broad statutory language.

Michigan law grants a tenant by the entirety some of the most essential property rights: the right to use the property, to receive income produced by it, and to exclude others from it. See Dolan v. City of Tigard, 512 U.S. 374, 384 (1994) (“[T]he right to exclude others” is “‘one of the most essential sticks in the bundle of rights that are commonly character­ized as property’” (quoting Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979))); Loretto v. Teleprompter Manhat­tan CATV Corp., 458 U.S. 419, 435 (1982) (including “use” as one of the “[p]roperty rights in a physical thing”). These rights alone may be sufficient to subject the husband’s inter­est in the entireties property to the federal tax lien. They gave him a substantial degree of control over the entireties property, and, as we noted in Drye, “in determining whether a federal taxpayer’s state-law rights constitute ‘property’ or ‘rights to property,’ [t]he important consideration is the breadth of the control the [taxpayer] could exercise over the property.” 528 U.S., at 61 (some internal quotation marks omitted).

The husband’s rights in the estate, however, went beyond use, exclusion, and income. He also possessed the right to alienate (or otherwise encumber) the property with the con­sent of respondent, his wife. Loretto, supra, at 435 (the right to “dispose” of an item is a property right). It is true, as respondent notes, that he lacked the right to unilaterally alienate the property, a right that is often in the bundle of property rights. See also post, at 296-297 (THOMAS, J., dis­senting). There is no reason to believe, however, that this one stick—the right of unilateral alienation—is essential to the category of “property.”

This Court has already stated that federal tax liens may attach to property that cannot be unilaterally alienated. In United States v. Rodgers, 461 U.S. 677 (1983), we considered the Federal Government’s power to foreclose homestead property attached by a federal tax lien. Texas law provided that “‘the owner or claimant of the property claimed as homestead [may not], if married, sell or abandon the home­stead without the consent of the other spouse.’” Id., at 684-­685 (quoting Tex. Const., Art. 16, § 50). We nonetheless stated that “[i]n the homestead context . . . , there is no doubt...that not only do both spouses (rather than neither) have an independent interest in the homestead property, but that a federal tax lien can at least attach to each of those interests.” 461 U.S., at 703, n. 31; cf. Drye, supra, at 60, n. 7 (noting that “an interest in a spendthrift trust has been held to constitute ‘“property” for purposes of § 6321’ even though the beneficiary may not transfer that interest to third parties”).

Excluding property from a federal tax lien simply because the taxpayer does not have the power to unilaterally alienate it would, moreover, exempt a rather large amount of what is commonly thought of as property. It would exempt not only the type of property discussed in Rodgers, but also some community property. Community property States often provide that real community property cannot be alienated without the consent of both spouses. See, e.g., Ariz. Rev. Stat. Ann. § 25-214(C) (2000); Cal. Fam. Code Ann. § 1102 (West 1994); Idaho Code § 32-912 (1996); La. Civ. Code Ann., Art. 2347 (West Supp. 2002); Nev. Rev. Stat. Ann. § 123.230(3) (Supp. 2001); N. M. Stat. Ann. § 40-3-13 (1999); Wash. Rev. Code § 26.16.030(3) (1994). Accordingly, the fact that re­spondent’s husband could not unilaterally alienate the prop­erty does not preclude him from possessing “property and rights to property” for the purposes of § 6321.

Respondent’s husband also possessed the right of survivor-­ship—the right to automatically inherit the whole of the es­tate should his wife predecease him. Respondent argues that this interest was merely an expectancy, which we sug­gested in Drye would not constitute “property” for the pur­poses of a federal tax lien. 528 U.S., at 60, n. 7 (“[We do not mean to suggest] that an expectancy that has pecuniary value...would fall within § 6321 prior to the time it ripens into a present estate”). Drye did not decide this question, however, nor do we need to do so here. As we have dis­cussed above, a number of the sticks in respondent’s hus­band’s bundle were presently existing. It is therefore not necessary to decide whether the right to survivorship alone would qualify as “property” or “rights to property” under § 6321.

That the rights of respondent’s husband in the entireties property constitute “property” or “rights to property” “be­longing to” him is further underscored by the fact that, if the conclusion were otherwise, the entireties property would belong to no one for the purposes of § 6321. Respondent had no more interest in the property than her husband; if neither of them had a property interest in the entireties property, who did? This result not only seems absurd, but would also allow spouses to shield their property from federal taxation by classifying it as entireties property, facilitating abuse of the federal tax system. Johnson, After Drye: The Likely Attachment of the Federal Tax Lien to Tenancy-by-the-­Entireties Interests, 75 Ind. L. J. 1163, 1171 (2000).

Justice Scalia’s and Justice Thomas’ dissents claim that the conclusion that the husband possessed an interest in the entireties property to which the federal tax lien could attach is in conflict with the rules for tax liens relating to partnership property. See post, at 289 (opinion of Scalia, J.); see also post, at 295-296, n. 4 (opinion of Thomas, J.). This is not so. As the authorities cited by Justice Thomas reflect, the federal tax lien does attach to an individual part­ner’s interest in the partnership, that is, to the fair market value of his or her share in the partnership assets. Ibid. (citing B. Bittker & M. McMahon, Federal Income Taxation of Individuals ¶ 44.5[4][a] (2d ed. 1995 and 2000 Cum. Supp.)); see also 1 A. Bromberg & L. Ribstein, Partnership § 3.05(d) (2002-1 Supp.) (hereinafter Bromberg & Ribstein) (citing Uniform Partnership Act § 28, 6 U. L. A. 744 (1995)). As a holder of this lien, the Federal Government is entitled to “receive...the profits to which the assigning partner would otherwise be entitled,” including predissolution distributions and the proceeds from dissolution. Uniform Partnership Act § 27(1), id., at 736.

There is, however, a difference between the treatment of entireties property and partnership assets. The Federal Government may not compel the sale of partnership assets (although it may foreclose on the partner’s interest, 1 Brom­berg & Ribstein § 3.05(d)(3)(iv)). It is this difference that is reflected in Justice Scalia’s assertion that partnership property cannot be encumbered by an individual partner’s debts. See post, at 289. This disparity in treatment be­tween the two forms of ownership, however, arises from our decision in United States v. Rodgers, supra (holding that the Government may foreclose on property even where the co-­owners lack the right of unilateral alienation), and not our holding today. In this case, it is instead the dissenters’ the­ory that departs from partnership law, as it would hold that the Federal Government’s lien does not attach to the hus­band’s interest in the entireties property at all, whereas the lien may attach to an individual’s interest in partnership property.

Respondent argues that, whether or not we would con­clude that respondent’s husband had an interest in the en­tireties property, legislative history indicates that Congress did not intend that a federal tax lien should attach to such an interest. In 1954, the Senate rejected a proposed amend­ment to the tax lien statute that would have provided that the lien attach to “property or rights to property (including the interest of such person as tenant by the entirety).” S. Rep. No. 1622, 83d Cong., 2d Sess., 575 (1954). We have elsewhere held, however, that failed legislative proposals are “a particularly dangerous ground on which to rest an inter­pretation of a prior statute,” Pension Benefit Guaranty Cor­poration v. LTV Corp., 496 U.S. 633, 650 (1990), reasoning that “‘[c]ongressional inaction lacks persuasive significance because several equally tenable inferences may be drawn from such inaction, including the inference that the existing legislation already incorporated the offered change.’” Cen­tral Bank of Denver, N. A. v. First Interstate Bank of Den­ver, N. A., 511 U.S. 164, 187 (1994). This case exemplifies the risk of relying on such legislative history. As we noted in United States v. Rodgers, 461 U. S., at 704, n. 31, some legislative history surrounding the 1954 amendment indi­cates that the House intended the amendment to be nothing more than a “clarification” of existing law, and that the Sen­ate rejected the amendment only because it found it “super­fluous.” See H. R. Rep. No. 1337, 83d Cong., 2d Sess., A406 (1954) (noting that the amendment would “clarif[y] the term ‘property and rights to property’ by expressly including therein the interest of the delinquent taxpayer in an estate by the entirety”); S. Rep. No. 1622, at 575 (“It is not clear what change in existing law would be made by the paren­thetical phrase. The deletion of the phrase is intended to continue the existing law”).

The same ambiguity that plagues the legislative history accompanies the common-law background of Congress’ en­actment of the tax lien statute. Respondent argues that Congress could not have intended the passage of the federal tax lien statute to alter the generally accepted rule that liens could not attach to entireties property. See Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104, 108 (1991) (“[W]here a common-law principle is well established...the courts may take it as given that Congress has legislated with an expectation that the principle will apply except ‘when a statutory purpose to the contrary is evident’”). The common-law rule was not so well established with respect to the application of a federal tax lien that we must assume that Congress considered the impact of its enactment on the question now before us. There was not much of a common-­law background on the question of the application of federal tax liens, as the first court of appeals cases dealing with the application of such a lien did not arise until the 1950’s. United States v. Hutcherson, 188 F. 2d 326 (CA8 1951); Raf­faele v. Granger, 196 F. 2d 620 (CA3 1952). This background is not sufficient to overcome the broad statutory language Congress did enact, authorizing the lien to attach to “all property and rights to property” a taxpayer might have.

We therefore conclude that respondent’s husband’s interest in the entireties property constituted “property” or “rights to property” for the purposes of the federal tax lien statute. We recognize that Michigan makes a different choice with respect to state law creditors: “[L]and held by husband and wife as tenants by entirety is not subject to levy under exe­cution on judgment rendered against either husband or wife alone.” Sanford v. Bertrau, 204 Mich. 244, 247, 169 N. W. 880, 881 (1918). But that by no means dictates our choice. The interpretation of 26 U.S.C. § 6321 is a federal question, and in answering that question we are in no way bound by state courts’ answers to similar questions involving state law. As we elsewhere have held, “‘exempt status under state law does not bind the federal collector.’” Drye v. United States, 528 U.S., at 59. See also Rodgers, supra, at 701 (clarifying that the Supremacy Clause “provides the underpinning for the Federal Government’s right to sweep aside state-created exemptions”).

V

We express no view as to the proper valuation of respond­ent’s husband’s interest in the entireties property, leaving this for the Sixth Circuit to determine on remand. We note, however, that insofar as the amount is dependent upon whether the 1989 conveyance was fraudulent, see post, at 290, n. 1 (Thomas, J., dissenting), this case is somewhat anomalous. The Sixth Circuit affirmed the District Court’s judgment that this conveyance was not fraudulent, and the Government has not sought certiorari review of that deter­mination. Since the District Court’s judgment was based on the notion that, because the federal tax lien could not attach to the property, transferring it could not constitute an attempt to evade the Government creditor, 65 F. Supp. 2d, at 657-659, in future cases, the fraudulent conveyance ques­tion will no doubt be answered differently.

The judgment of the United States Court of Appeals for the Sixth Circuit is accordingly reversed, and the case is remanded for proceedings consistent with this opinion.

It is so ordered.

Justice Scalia,

dissenting.

I join Justice Thomas’s dissent, which points out (to no relevant response from the Court) that a State’s decision to treat the marital partnership as a separate legal entity, whose property cannot be encumbered by the debts of its individual members, is no more novel and no more “artificial” than a State’s decision to treat the commercial partnership as a separate legal entity, whose property cannot be encum­bered by the debts of its individual members.

I write separately to observe that the Court nullifies (inso­far as federal taxes are concerned, at least) a form of prop­erty ownership that was of particular benefit to the stay-at-­home spouse or mother. She is overwhelmingly likely to be the survivor that obtains title to the unencumbered prop­erty; and she (as opposed to her business-world husband) is overwhelmingly unlikely to be the source of the individual indebtedness against which a tenancy by the entirety pro­tects. It is regrettable that the Court has eliminated a large part of this traditional protection retained by many States.

Justice Thomas,

dissenting.

The Court today allows the Internal Revenue Service (IRS) to reach proceeds from the sale of real property that did not belong to the taxpayer, respondent’s husband, Don Craft,1 because, in the Court’s view, he “possesse[d] individ­ual rights in the [tenancy by the entirety] estate sufficient to constitute ‘property’ or ‘rights to property’ for the purposes of the lien” created by 26 U.S.C. § 6321. Ante, at 276. The Court does not contest that the tax liability the IRS seeks to satisfy is Mr. Craft’s alone, and does not claim that, under Michigan law, real property held as a tenancy by the entirety belongs to either spouse individually. Nor does the Court suggest that the federal tax lien attaches to particular “rights to property” held individually by Mr. Craft. Rather, borrowing the metaphor of “property as a ‘bundle of sticks’—a collection of individual rights which, in certain combina­tions, constitute property,” ante, at 278, the Court proposes that so long as sufficient “sticks” in the bundle of “rights to property” “belong to” a delinquent taxpayer, the lien can attach as if the property itself belonged to the taxpayer, ante, at 285.

This amorphous construct ignores the primacy of state law in defining property interests, eviscerates the statutory dis­tinction between “property” and “rights to property” drawn by § 6321, and conflicts with an unbroken line of authority from this Court, the lower courts, and the IRS. Its applica­tion is all the more unsupportable in this case because, in my view, it is highly unlikely that the limited individual “rights to property” recognized in a tenancy by the entirety under Michigan law are themselves subject to lien. I would affirm the Court of Appeals and hold that Mr. Craft did not have “property” or “rights to property” to which the federal tax lien could attach.

I

Title 26 U.S.C. § 6321 provides that a federal tax lien at­taches to “all property and rights to property, whether real or personal, belonging to” a delinquent taxpayer. It is un­contested that a federal tax lien itself “creates no property rights but merely attaches consequences, federally defined, to rights created under state law.” United States v. Bess, 357 U.S. 51, 55 (1958) (construing the 1939 version of the federal tax lien statute). Consequently, the Government’s lien under § 6321 “cannot extend beyond the property inter­ests held by the delinquent taxpayer,” United States v. Rodgers, 461 U.S. 677, 690-691 (1983), under state law. Be­fore today, no one disputed that the IRS, by operation of § 6321, “steps into the taxpayer’s shoes,” and has the same rights as the taxpayer in property or rights to property sub­ject to the lien. B. Bittker & M. McMahon, Federal Income Taxation of Individuals ¶ 44.5[4][a] (2d ed. 1995 and 2000 Cum. Supp.) (hereinafter Bittker). I would not expand “‘the nature of the legal interest’” the taxpayer has in the property beyond those interests recognized under state law. Aquilino v. United States, 363 U.S. 509, 513 (1960) (citing Morgan v. Commissioner, 309 U.S. 78, 82 (1940)).

A

If the Grand Rapids property “belong[ed] to” Mr. Craft under state law prior to the termination of the tenancy by the entirety, the federal tax lien would have attached to the Grand Rapids property. But that is not this case. As the Court recognizes, pursuant to Michigan law, as under Eng­lish common law, property held as a tenancy by the entirety does not belong to either spouse, but to a single entity com­posed of the married persons. See ante, at 280-282. Nei­ther spouse has “any separate interest in such an estate.” Sanford v. Bertrau, 204 Mich. 244, 249, 169 N. W. 880, 882 (1918); see also Long v. Earle, 277 Mich. 505, 517, 269 N. W. 577, 581 (1936) (“Each [spouse] is vested with an entire title and as against the one who attempts alone to convey or in­cumber such real estate, the other has an absolute title”). An entireties estate constitutes an indivisible “sole tenancy.” See Budwit v. Herr, 339 Mich. 265, 272, 63 N. W. 2d 841, 844 (1954); see also Tyler v. United States, 281 U.S. 497, 501 (1930) (“[T]he tenants constitute a unit; neither can dispose of any part of the estate without the consent of the other; and the whole continues in the survivor”). Because Michi­gan does not recognize a separate spousal interest in the Grand Rapids property, it did not “belong” to either respond­ent or her husband individually when the IRS asserted its lien for Mr. Craft’s individual tax liability. Thus, the prop­erty was not property to which the federal tax lien could attach for Mr. Craft’s tax liability.

The Court does not dispute this characterization of Michi­gan’s law with respect to the essential attributes of the ten­ancy by the entirety estate. However, relying on Drye v. United States, 528 U.S. 49, 59 (1999), which in turn relied upon United States v. Irvine, 511 U.S. 224 (1994), and United States v. Mitchell, 408 U.S. 190 (1971), the Court suggests that Michigan’s definition of the tenancy by the entirety es­tate should be overlooked because federal tax law is not con­trolled by state legal fictions concerning property ownership. Ante, at 279. But the Court misapprehends the application of Drye to this case.

Drye, like Irvine and Mitchell before it, was concerned not with whether state law recognized “property” as belong­ing to the taxpayer in the first place, but rather with whether state laws could disclaim or exempt such property from federal tax liability after the property interest was cre­ated. Drye held only that a state-law disclaimer could not retroactively undo a vested right in an estate that the tax­payer already held, and that a federal lien therefore attached to the taxpayer’s interest in the estate. 528 U.S., at 61 (rec­ognizing that a disclaimer does not restore the status quo ante because the heir “determines who will receive the prop­erty—himself if he does not disclaim, a known other if he does”). Similarly, in Irvine, the Court held that a state law allowing an individual to disclaim a gift could not force the Court to be “struck blind” to the fact that the transfer of “property” or “property rights” for which the gift tax was due had already occurred; “state property transfer rules do not transfer into federal taxation rules.” 511 U.S., at 239-­240 (emphasis added). See also Mitchell, supra, at 204 (holding that right to renounce a marital interest under state law does not indicate that the taxpayer had no right to prop­erty before the renunciation).

Extending this Court’s “state law fiction” jurisprudence to determine whether property or rights to property exist under state law in the first place works a sea change in the role States have traditionally played in “creating and defin­ing” property interests. By erasing the careful line be­tween state laws that purport to disclaim or exempt prop­erty interests after the fact, which the federal tax lien does not respect, and state laws’ definition of property and prop­erty rights, which the federal tax lien does respect, the Court does not follow Drye, but rather creates a new federal common law of property. This contravenes the previously settled rule that the definition and scope of property is left to the States. See Aquilino, supra, at 513, n. 3 (recognizing unsoundness of leaving the definition of property interests to a nebulous body of federal law, “because it ignores the long-established role that the States have played in creating property interests and places upon the courts the task of attempting to ascertain a taxpayer’s property rights under an undefined rule of federal law”).

B

That the Grand Rapids property does not belong to Mr. Craft under Michigan law does not end the inquiry, how­ever, since the federal tax lien attaches not only to “prop­erty” but also to any “rights to property” belonging to the taxpayer. While the Court concludes that a laundry list of “rights to property” belonged to Mr. Craft as a tenant by the entirety,2 it does not suggest that the tax lien attached to any of these particular rights.3 Instead, the Court gathers these rights together and opines that there were sufficient sticks to form a bundle, so that “respondent’s husband’s in­terest in the entireties property constituted ‘property’ or ‘rights to property’ for the purposes of the federal tax lien statute.” Ante, at 288, 285.

But the Court’s “sticks in a bundle” metaphor collapses precisely because of the distinction expressly drawn by the statute, which distinguishes between “property” and “rights to property.” The Court refrains from ever stating whether this case involves “property” or “rights to property” even though § 6321 specifically provides that the federal tax lien attaches to “property” and “rights to property” “belonging to” the delinquent taxpayer, and not to an imprecise con­struct of “individual rights in the estate sufficient to consti­tute ‘property’ or ‘rights to property’ for the purposes of the lien.” Ante, at 276.4

Rather than adopt the majority’s approach, I would ask specifically, as the statute does, whether Mr. Craft had any particular “rights to property” to which the federal tax lien could attach. He did not.5 Such “rights to property” that have been subject to the § 6321 lien are valuable and “pecuni­ary,” i.e., they can be attached, and levied upon or sold by the Government.6 Drye, 528 U.S., at 58-60, and n. 7. With such rights subject to lien, the taxpayer’s interest has “rip­en[ed] into a present estate” of some form and is more than a mere expectancy, id., at 60,. n. 7, and thus the taxpayer has an apparent right “to channel that value to [another],” id., at 61.

In contrast, a tenant in a tenancy by the entirety not only lacks a present divisible vested interest in the property and control with respect to the sale, encumbrance, and transfer of the property, but also does not possess the ability to devise any portion of the property because it is subject to the oth­er’s indestructible right of survivorship. Rogers v. Rogers, 136 Mich. App. 125, 135-137, 356 N. W. 2d 288, 293-294 (1984). This latter fact makes the property significantly dif­ferent from community property, where each spouse has a present one-half vested interest in the whole, which may be devised by will or otherwise to a person other than the spouse. See 4 G. Thompson, Real Property § 37.14(a) (D. Thomas ed. 1994) (noting that a married person’s power to devise one-half of the community property is “consistent with the fundamental characteristic of community property”: “community ownership means that each spouse owns 50% of each community asset”).7 See also Drye, 528 U.S., at 61 (“[I]n determining whether a federal taxpayer’s state-law rights constitute ‘property’ or ‘rights to property,’ the important consideration is the breadth of the control the taxpayer could exercise over the property” (emphasis added, citation and brackets omitted)).

It is clear that some of the individual rights of a tenant in entireties property are primarily personal, dependent upon the taxpayer’s status as a spouse, and similarly not suscepti­ble to a tax lien. For example, the right to use the property in conjunction with one’s spouse and to exclude all others appears particularly ill suited to being transferred to an­other, see ibid., and to lack “exchangeable value,” id., at 56.

Nor do other identified rights rise to the level of “rights to property” to which a § 6321 lien can attach, because they represent, at most, a contingent future interest, or an “ex­pectancy” that has not “ripen[ed] into a present estate.” Id., at 60, n. 7 (“Nor do we mean to suggest that an expec­tancy that has pecuniary value and is transferable under state law would fall within § 6321 prior to the time it ripens into a present estate”). Cf. Bess, 357 U.S., at 55-56 (holding that no federal tax lien could attach to proceeds of the tax­payer’s life insurance policy because “[i]t would be anoma­lous to view as ‘property’ subject to lien proceeds never within the insured’s reach to enjoy”). By way of example, the survivorship right wholly depends upon one spouse out­living the other, at which time the survivor gains “substan­tial rights, in respect of the property, theretofore never en­joyed by [the] survivor.” Tyler, 281 U.S., at 503. While the Court explains that it is “not necessary to decide whether the right to survivorship alone would qualify as ‘property’ or ‘rights to property’” under § 6321, ante, at 285, the facts of this case demonstrate that it would not. Even assuming both that the right of survivability continued after the demise of the tenancy estate and that the tax lien could attach to such a contingent future right, creating a lienable interest upon the death of the nonliable spouse, it would not help the IRS here; respondent’s husband predeceased her in 1998, and there is no right of survivorship at issue in this case.

Similarly, while one spouse might escape the absolute limi­tations on individual action with respect to tenancy by the entirety property by obtaining the right to one-half of the property upon divorce, or by agreeing with the other spouse to sever the tenancy by the entirety, neither instance is an event of sufficient certainty to constitute a “right to prop­erty” for purposes of § 6321. Finally, while the federal tax lien could arguably have attached to a tenant’s right to any “rents, products, income, or profits” of real property held as tenants by the entirety, Mich. Comp. Laws Ann. § 557.71 (West 1988), the Grand Rapids property created no rents, products, income, or profits for the tax lien to attach to.

In any event, all such rights to property, dependent as they are upon the existence of the tenancy by the entirety estate, were likely destroyed by the quitclaim deed that sev­ered the tenancy. See n. 1, supra. Unlike a lien attached to the property itself, which would survive a conveyance, a lien attached to a “right to property” falls squarely within the maxim that “the tax collector not only steps into the taxpayer’s shoes but must go barefoot if the shoes wear out.” Bittker ¶ 44.5[4][a] (noting that “a state judgment termi­nating the taxpayer’s rights to an asset also extinguishes the federal tax lien attached thereto”). See also Elliott ¶ 9.09[3][d][i] (explaining that while a tax lien may attach to a taxpayer’s option on property, if the option terminates, the Government’s lien rights would terminate as well).

Accordingly, I conclude that Mr. Craft had neither “prop­erty” nor “rights to property” to which the federal tax lien could attach.

II

That the federal tax lien did not attach to the Grand Rap­ids property is further supported by the consensus among the lower courts. For more than 50 years, every federal court reviewing tenancies by the entirety in States with a similar understanding of tenancy by the entirety as Michigan has concluded that a federal tax lien cannot attach to such property to satisfy an individual spouse’s tax liability.8 This consensus is supported by the IRS’ consistent recognition, arguably against its own interest, that a federal tax lien against one spouse cannot attach to property or rights to property held as a tenancy by the entirety.9

That the Court fails to so much as mention this consensus, let alone address it or give any reason for overruling it, is puzzling. While the positions of the lower courts and the IRS do not bind this Court, one would be hard pressed to explain why the combined weight of these judicial and ad­ministrative sources—including the IRS’ instructions to its own employees—do not constitute relevant authority.

Finally, while the majority characterizes Michigan’s view that the tenancy by the entirety property does not belong to the individual spouses as a “state law fiction,” ante, at 276, our precedents, including Drye, 528 U.S., at 58-60, hold that state, not federal, law defines property interests. Owner­ship by “the marriage” is admittedly a fiction of sorts, but so is a partnership or corporation. There is no basis for ig­noring this fiction so long as federal law does not define prop­erty, particularly since the tenancy by the entirety property remains subject to lien for the tax liability of both tenants.

Nor do I accept the Court’s unsupported assumption that its holding today is necessary because a contrary result would “facilitat[e] abuse of the federal tax system.” Ante, at 285. The Government created this straw man, Brief for United States 30-32, suggesting that the property transfer from the tenancy by the entirety to respondent was somehow improper, see id., at 30-31, n. 20 (characterizing scope of “[t]he tax avoidance scheme sanctioned by the court of ap­peals in this case”), even though it chose not to appeal the lower court’s contrary assessment. But the longstanding consensus in the lower courts that tenancy by the entirety property is not subject to lien for the tax liability of one spouse, combined with the Government’s failure to adduce any evidence that this has led to wholesale tax fraud by mar­ried individuals, suggests that the Court’s policy rationale for its holding is simply unsound.

Just as I am unwilling to overturn this Court’s longstand­ing precedent that States define and create property rights and forms of ownership, Aquilino, 363 U.S., at 513, n. 3, I am equally unwilling to redefine or dismiss as fictional forms of property ownership that the State has recognized in favor of an amorphous federal common-law definition of property.

I respectfully dissent.

1

The Grand Rapids property was tenancy by the entirety property owned by Mr. and Mrs. Craft when the tax lien attached, but was conveyed by the Crafts to Mrs. Craft by quitclaim deed in 1989. That conveyance terminated the entirety estate. Mich. Comp. Laws Ann. § 557.101 (West 1988); see also United States v. Certain Real Property Located at 2525 Leroy Lane, 910 F. 2d 343, 351 (CA6 1990). The District Court and Court of Appeals both held that the transfer did not constitute a fraudulent con­veyance, a ruling the Government has not appealed. The IRS is undoubt­edly entitled to any proceeds that Mr. Craft received or to which he was entitled from the 1989 conveyance of the tenancy by the entirety property for $1; at that point the tenancy by the entirety estate was destroyed and at least half of the proceeds, or 50 cents, was “property” or “rights to property” “belonging to” Mr. Craft. By contrast, the proceeds that the IRS claims here are from Mrs. Craft’s 1992 sale of the property to a third party. At the time of the sale, she owned the property in fee simple, and accordingly Mr. Craft neither received nor was entitled to these funds.

2

The parties disagree as to whether Michigan law recognizes the “rights to property” identified by the Court as individual rights “belonging to” each tenant in entireties property. Without deciding a question better resolved by the Michigan courts, for the purposes of this case I will as­sume, arguendo, that Michigan law recognizes separate interests in these “rights to property.”

3

Nor does the Court explain how such “rights to property” survived the destruction of the tenancy by the entirety, although, for all intents and purposes, it acknowledges that such rights as it identifies exist by virtue of the tenancy by the entirety estate. Even Judge Ryan's concurrence in the Sixth Circuit’s first ruling in this matter is best read as making the Federal Government’s right to execute its lien dependent upon the factual finding that the conveyance was a fraudulent transaction. See 140 F. 3d 638, 648-649 (1998).

4

The Court’s reasoning that because a taxpayer has rights to property a federal tax lien can attach not only to those rights but also to the prop­erty itself could have far-reaching consequences. As illustration, in the partnership setting as elsewhere, the Government’s lien under § 6321 places the Government in no better position than the taxpayer to whom the property belonged: “[F]or example, the lien for a partner’s unpaid income taxes attaches to his interest in the firm, not to the firm’s assets.” Bittker ¶ 44.5[4][a]. Though partnership property currently is “not sub­ject to attachment or execution, except on a claim against the part­nership,” Rev. Rul. 73-24, 1973-1 Cum. Bull. 602; cf. United States v. Kaufman, 267 U.S. 408 (1925), under the logic of the Court’s opinion partnership property could be attached for the tax liability of an individ­ual partner. Like a tenant in a tenancy by the entirety, the partner has significant rights to use, enjoy, and control the partnership property in conjunction with his partners. I see no principled way to distinguish between the propriety of attaching the federal tax lien to partnership property to satisfy the tax liability of a partner, in contravention of cur­rent practice, and the propriety of attaching the federal tax lien to tenancy by the entirety property in order to satisfy the tax liability of one spouse, also in contravention of current practice. I do not doubt that a tax lien may attach to a partner’s partnership interest to satisfy his individual tax liability, but it is well settled that the lien does not, thereby, attach to property belonging to the partnership. The problem for the IRS in this case is that, unlike a partnership interest, such limited rights that Mr. Craft had in the Grand Rapids property are not the kind of rights to property to which a lien can attach, and the Grand Rapids property itself never “belong[ed] to” him under Michigan law.

5

Even such rights as Mr. Craft arguably had in the Grand Rapids prop­erty bear no resemblance to those to which a federal tax lien has ever attached. See W. Elliott, Federal Tax Collections, Liens, and Levies ¶¶ 9.09[3][a] — [f] (2d ed. 1995 and 2000 Cum. Supp.) (hereinafter Elliott) (listing examples of rights to property to which a federal tax lien attaches, such as the right to compel payment; the right to withdraw money from a bank account, or to receive money from accounts receivable; wages earned but not paid; installment payments under a contract of sale of real estate; annuity payments; a beneficiary’s rights to payment under a spendthrift trust; a liquor license; an easement; the taxpayer’s interest in a timeshare; options; the taxpayer’s interest in an employee benefit plan or individual retirement account).

6

See 26 U.S.C. §§6331, 6335-6336.

7

And it is similarly different from the situation in United States v. Rodgers, 461 U.S. 677 (1983), where the question was not whether a vested property interest in the family home to which the federal tax lien could attach “belong[ed] to” the taxpayer. Rather, in Rodgers, the only question was whether the federal tax lien for the husband’s tax liability could be foreclosed against the property under 26 U.S.C. § 7403, despite his wife’s homestead right under state law. See 461 U.S., at 701-703, and n. 31.

8

See IRS v. Gaster, 42 F. 3d 787, 791 (CA3 1994) (concluding that the IRS is not entitled to a lien on property owned as a tenancy by the entirety to satisfy the tax obligations of one spouse); Pitts v. United States, 946 F. 2d 1569, 1571-1572 (CA4 1991) (same); United States v. American Nat. Bank of Jacksonville, 255 F 2d 504, 507 (CA5), cert. denied, 358 U.S. 835 (1958) (same); Raffaele v. Granger, 196 F. 2d 620, 622-623 (CA3 1952) (same); United States v. Hutcherson, 188 F. 2d 326, 331 (CA8 1951) (ex­plaining that the interest of one spouse in tenancy by the entirety prop­erty “is not a right to property or property in any sense”); United States v. Nathanson, 60 F. Supp. 193, 194 (ED Mich. 1945) (finding no designation in the Federal Revenue Act for imposing tax upon property held by the entirety for taxes due from one person alone); Shaw v. United States, 94 F. Supp. 245, 246 (WD Mich. 1939) (recognizing that the nature of the estate under Michigan law precludes the tax lien from attaching to ten­ancy by the entirety property for the tax liability of one spouse). See also Benson v. United States, 442 F. 2d 1221, 1228 (CADC 1971) (recogniz­ing the Government’s concession that property owned by the parties as tenants by the entirety cannot be subjected to a tax lien for the debt of one tenant); Cole v. Cardoza, 441 F. 2d 1337, 1343 (CA6 1971) (noting Government concession that, under Michigan law, it had no valid claim against real property held by tenancy by the entirety).

9

See, e.g., Internal Revenue Manual § 5.8.4.2.3 (RIA 2002), available at WESTLAW, RIA-IRM database (Mar. 29, 2002) (listing “property owned as tenants by the entirety” as among the assets beyond the reach of the Government’s tax lien); id., § 5.6.1.2.3 (recognizing that a consensual lien may be appropriate “when the federal tax lien does not attach to the prop­erty in question. For example, an assessment exists against only one spouse and the federal tax lien does not attach to real property held as tenants by the entirety”); IRS Chief Counsel Advisory (Aug. 17, 2001) (noting that consensual liens, or mortgages, are to be used “as a means of securing the Government’s right to collect from property the assessment lien does not attach to, such as real property held as a tenancy by the entirety” (emphasis added)); IRS Litigation Bulletin No. 407 (Aug. 1994) (“Traditionally, the government has taken the view that a federal tax lien against a single debtor-spouse does not attach to property or rights to property held by both spouses as tenants by the entirety”); IRS Litigation Bulletin No. 388 (Jan. 1993) (explaining that neither the Department of Justice nor IRS chief counsel interpreted United States v. Rodgers, 461 U.S. 677 (1983), to mean that a federal tax lien against one spouse encum­bers his or her interest in entireties property, and noting that it “do[es] not believe the Department will again argue the broader interpretation of Rodgers,” which would extend the reach of the federal tax lien to property held by the entireties); Benson, supra, at 1223; Cardoza, supra, at 1343.

Michael O'Brien, Respondent-Appellant, v Loretta O'Brien, Appellant-Respondent.

decided December 26, 1985

Argued November 11, 1985;

POINTS OF COUNSEL

Albert J. Emanuelli for appellant-respondent.

Willard H. Da Silva and Richard J. Keidel for respondent-­appellant.

Sally Weinraub, Shirley Tolley and Brynne Haines for West­chester Women’s Bar Association, amicus curiae.

I. A medical license earned during marriage is intended by the Legislature as "marital property” within the meaning of Domestic Rela­tions Law § 236 (B) and has separate value when there are no other marital assets to distribute. (Kriger v Kriger, 115 Misc 2d 595; Spaulding v Benenati, 57 NY2d 418; Conner v Conner, 97 AD2d 88; Litman v Litman, 93 AD2d 695, 61 NY2d 918; Matter of Bender v Board of Regents, 262 App Div 627; Conteh v Conteh, 117 Misc 2d 42; Jolis v Jolis, 98 AD2d 692; Lee v Lee, 93 AD2d 221; Arvantides v Arvantides, 64 NY2d 1033; Nehorayoff v Nehorayoff, 108 Misc 2d 311.) II. The uncontro­verted valuation by defendant’s expert fixing the present value of Dr. O’Brien’s medical license should be left intact because it was wholly credible by all acceptable standards of proof. (Meiselman v Crown Hgts. Hosp., 285 NY 389; People v Sugden, 35 NY2d 453; Franchell v Sims, 73 AD2d 1; Bartkow­iak v St. Adalbert’s R. C. Church Socy., 40 AD2d 306; Zanino­vich v American Airlines, 26 AD2d 155; DeLong v County of Erie, 89 AD2d 376; Mercado v City of New York, 46 Misc 2d 358; Sanchez v Denver & Rio Grande W. R. R. Co., 538 F2d 304; Heater v Chesapeake & Ohio Ry. Co., 497 F2d 1243; Hirschfeld v Hirschfeld, 96 AD2d 473.) III. The trial court properly considered and set forth the requisite Domestic Rela­tions Law § 236 (B) factors and CPLR 4213 (b) facts essential to its decision. (Nielsen v Nielsen, 91 AD2d 1016; Johnson v Johnson, 93 AD2d 855.) IV. Objections to the present value methodology of evaluating a medical license as property are invalid. V. Foreign jurisdictional approaches to the medical license syndrome are not controlling because no other State has a statute comparable to that of New York. VI. The trial court’s award to defendant could have exceeded 40% of the present value of the doctor’s medical license in view of the uncontroverted proof. VII. Reimbursement alone was not meaningful nor fair financial redress to defendant for her contributions to plaintiff's medical license. (In re Spong, 661 F2d 6.)

I. Knowledge is not "property”. (Erkenbrach v Erkenbrach, 96 NY 456; Langerman v Langerman, 303 NY 465; Matter of Swedenborg Found. v Lewisohn, 40 NY2d 87; Fulton Light, Heat & Power Co. v State of New York, 65 Misc 263, 138 App Div 931, 200 NY 400.) II. The classification of a professional license as "marital property” is a fiction to pro­duce a desired result. III. The New York statute does not authorize money awards in the abstract but limits the court to a division of property. (De Brauwere v De Brauwere, 203 NY 460; Laumier v Laumier, 237 NY 357.) IV. The vast majority of jurisdictions classify neither an educational degree nor a license as property but apply a different remedy. V. Reim­bursement is a possible remedy. VI. Rehabilitative mainte­nance, not reimbursement for general living expenses, is a remedy. (Lesman v Lesman, 88 AD2d 153.) VII. The assign­ment of future earnings is a distribution of separate property. (Hickland v Hickland, 39 NY2d 1; Lind v Lind, 89 AD2d 518; Corsell v Corsell, 101 AD2d 766; Van Ess v Van Ess, 100 AD2d 848; Pederson v Pederson, 91 AD2d 818.) VIII. The mandated 10 factors were not considered, and the basis for the award was not stated. (Nielsen v Nielsen, 91 AD2d 1016; Johnson v Johnson, 93 AD2d 855; International Salt Co. v State of New York, 125 Misc 2d 939.) IX. The courts below improperly refused to give consideration to any evidence of appellant’s misconduct. (M.V.R. v J.M.R., 115 Misc 2d 674; Giannola v Giannola, 109 Misc 2d 985; Librizzi v Librizzi, 112 Misc 2d 57; Alford v Alford, 104 AD2d 390; Lentz v Lentz, 103 AD2d 822; Van Ess v Van Ess, 100 AD2d 848; Wilson v Wilson, 101 AD2d 536; McMahan v McMahan, 100 AD2d 826; Pacifico v Pacifico, 101 AD2d 709; Stevens v Stevens, 107 AD2d 987; Nolan v Nolan, 107 AD2d 190.) X. The trial court’s failure to state the basis for its award is reversible error. (Nielsen v Nielsen, 91 AD2d 1016.) XI. The award of attorneys’ fees and accountant’s fees was improper under the circumstances. (Cataldi v Shaw, 93 AD2d 875; Matter of Gilman, 112 Misc 2d 452; Austin v Austin, 88 AD2d 649.)

I. The trial court correctly construed respondent’s medical license as mar­ital property under New York’s Equitable Distribution Law. (Litman v Litman, 61 NY2d 918; Clarkson v Clarkson, 103 AD2d 964; Majauskas v Majauskas, 61 NY2d 481; Damiano v Damiano, 94 AD2d 132; Reed v Reed, 93 AD2d 105.) II. The case law of sister States cannot be determinative since the statutes of those States do not contain the unique provisions of New York’s Equitable Distribution Law. III. An award based on the theory of restitution should consider all the elements of spousal contribution. IV. The trial court properly precluded testimony on the issue of defendant’s fault. (Blick­stein v Blickstein, 99 AD2d 287.)

OPINION OF THE COURT

Simons, J.

In this divorce action, the parties’ only asset of any conse­quence is the husband’s newly acquired license to practice medicine. The principal issue presented is whether that li­cense, acquired during their marriage, is marital property subject to equitable distribution under Domestic Relations Law § 236 (B) (5). Supreme Court held that it was and accord­ingly made a distributive award in defendant’s favor.* It also granted defendant maintenance arrears, expert witness fees and attorneys’ fees (114 Misc 2d 233). On appeal to the Appellate Division, a majority of that court held that plain­tiff’s medical license is not marital property and that defen­dant was not entitled to an award for the expert witness fees. It modified the judgment and remitted the case to Supreme Court for further proceedings, specifically for a determination of maintenance and a rehabilitative award (106 AD2d 223). The matter is before us by leave of the Appellate Division.

We now hold that plaintiff’s medical license constitutes "marital property” within the meaning of Domestic Relations Law § 236 (B) (1) (c) and that it is therefore subject to equita­ble distribution pursuant to subdivision 5 of that part. That being so, the Appellate Division erred in denying a fee, as a matter of law, to defendant’s expert witness who evaluated the license.

I

Plaintiff and defendant married on April 3, 1971. At the time both were employed as teachers at the same private school. Defendant had a bachelor’s degree and a temporary teaching certificate but required 18 months of postgraduate classes at an approximate cost of $3,000, excluding living expenses, to obtain permanent certification in New York. She claimed, and the trial court found, that she had relinquished the opportunity to obtain permanent certification while plain­tiff pursued his education. At the time of the marriage, plaintiff had completed only three and one-half years of col­lege but shortly afterward he returned to school at night to earn his bachelor’s degree and to complete sufficient premedi­cal courses to enter medical school. In September 1973 the parties moved to Guadalajara, Mexico, where plaintiff became a full-time medical student. While he pursued his studies defendant held several teaching and tutorial positions and contributed her earnings to their joint expenses. The parties returned to New York in December 1976 so that plaintiff could complete the last two semesters of medical school and internship training here. After they returned, defendant re­sumed her former teaching position and she remained in it at the time this action was commenced. Plaintiff was licensed to practice medicine in October 1980. He commenced this action for divorce two months later. At the time of trial, he was a resident in general surgery.

During the marriage both parties contributed to paying the living and educational expenses and they received additional help from both of their families. They disagreed on the amounts of their respective contributions but it is undisputed that in addition to performing household work and managing the family finances defendant was gainfully employed throughout the marriage, that she contributed all of her earnings to their living and educational expenses and that her financial contributions exceeded those of plaintiff. The trial court found that she had contributed 76% of the parties’ income exclusive of a $10,000 student loan obtained by defen­dant. Finding that plaintiff's medical degree and license are marital property, the court received evidence of its value and ordered a distributive award to defendant.

Defendant presented expert testimony that the present value of plaintiff's medical license was $472,000. Her expert testified that he arrived at this figure by comparing the average income of a college graduate and that of a general surgeon between 1985, when plaintiff's residency would end, and 2012, when he would reach age 65. After considering Federal income taxes, an inflation rate of 10% and a real interest rate of 3% he capitalized the difference in average earnings and reduced the amount to present value. He also gave his opinion that the present value of defendant’s contri­bution to plaintiff’s medical education was $103,390. Plaintiff offered no expert testimony on the subject.

The court, after considering the life-style that plaintiff would enjoy from the enhanced earning potential his medical license would bring and defendant’s contributions and efforts toward attainment of it, made a distributive award to her of $188,800, representing 40% of the value of the license, and ordered it paid in 11 annual installments of various amounts beginning November 1, 1982 and ending November 1, 1992. The court also directed plaintiff to maintain a life insurance policy on his life for defendant’s benefit for the unpaid balance of the award and it ordered plaintiff to pay defendant’s counsel fees of $7,000 and her expert witness fee of $1,000. It did not award defendant maintenance.

A divided Appellate Division, relying on its prior decision in Conner v Conner (97 AD2d 88) and the decision of the Fourth Department in Lesman v Lesman (88 AD2d 153, appeal dis­missed 57 NY2d 956), concluded that a professional license acquired during marriage is not marital property subject to distribution. It therefore modified the judgment by striking the trial court’s determination that it is and by striking the provision ordering payment of the expert witness for evaluat­ing the license and remitted the case for further proceedings.

On these cross appeals, defendant seeks reinstatement of the judgment of the trial court. Plaintiff contends that the Appellate Division correctly held that a professional license is not marital property but he also urges that the trial court failed to adequately explain what factors it relied on in making its decision, that it erroneously excluded evidence of defendant’s marital fault and that the trial court’s awards for attorneys and expert witness fees were improper.

II

The Equitable Distribution Law contemplates only two classes of property: marital property and separate property (Domestic Relations Law § 236 [B] [c], [d]). The former, which is subject to equitable distribution, is defined broadly as "all property acquired by either or both spouses during the mar­riage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held” (Domestic Relations Law § 236 [B] [1] [c] [emphasis added]; see, § 236 [B] [5] [b], [c]). Plaintiff does not contend that his license is excluded from distribution because it is separate property; rather, he claims that it is not property at all but represents a personal attainment in acquir­ing knowledge. He rests his argument on decisions in similar cases from other jurisdictions and on his view that a license does not satisfy common-law concepts of property. Neither contention is controlling because decisions in other States rely principally on their own statutes, and the legislative history underlying them, and because the New York Legislature deliberately went beyond traditional property concepts when it formulated the Equitable Distribution Law (see generally, 2 Foster-Freed-Brandes, Law and the Family—New York ch 33, at 917 et set. [1985 Cum Supp]). Instead, our statute recognizes that spouses have an equitable claim to things of value arising out of the marital relationship and classifies them as subject to distribution by focusing on the marital status of the parties at the time of acquisition. Those things acquired during mar­riage and subject to distribution have been classified as "mari­tal property” although, as one commentator has observed, they hardly fall within the traditional property concepts because there is no common-law property interest remotely resembling marital property. "It is a statutory creature, is of no meaning whatsoever during the normal course of a mar­riage and arises full-grown, like Athena, upon the signing of a separation agreement or the commencement of a matrimonial action. [Thus] [i]t is hardly surprising, and not at all relevant, that traditional common law property concepts do not fit in parsing the meaning of 'marital property’” (Florescue, "Mar­ket Value”, Professional Licenses and Marital Property: A Dilemma in Search of a Horn, 1982 NY St Bar Assn Fam L Rev 13 [Dec.]). Having classified the "property” subject to distribution, the Legislature did not attempt to go further and define it but left it to the courts to determine what interests come within the terms of section 236 (B) (1) (c).

We made such a determination in Majauskas v Majauskas (61 NY2d 481), holding there that vested but unmatured pension rights are marital property subject to equitable distri­bution. Because pension benefits are not specifically identified as marital property in the statute, we looked to the express reference to pension rights contained in section 236 (B) (5) (d) (4) , which deals with equitable distribution of marital prop­erty, to other provisions of the equitable distribution statute and to the legislative intent behind its enactment to deter­mine whether pension rights are marital property or separate property. A similar analysis is appropriate here and leads to the conclusion that marital property encompasses a license to practice medicine to the extent that the license is acquired during marriage.

Section 236 provides that in making an equitable distribu­tion of marital property, "the court shall consider: * * * (6) any equitable claim to, interest in, or direct or indirect contri­bution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party [and] * * * (9) the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession” (Domestic Relations Law § 236 [B] [d] [6], [9] [emphasis added]). Where equitable distribution of marital property is appropriate but "the distribution of an interest in a business, corporation or profession would be contrary to law” the court shall make a distributive award in lieu of an actual distribution of the property (Domestic Rela­tions Law § 236 [B] [5] [e] [emphasis added]). The words mean exactly what they say: that an interest in a profession or professional career potential is marital property which may be represented by direct or indirect contributions of the non-title-­holding spouse, including financial contributions and nonfi­nancial contributions made by caring for the home and fam­ily.

The history which preceded enactment of the statute con­firms this interpretation. Reform of section 236 was advocated because experience had proven that application of the tradi­tional common-law title theory of property had caused inequi­ties upon dissolution of a marriage. The Legislature replaced the existing system with equitable distribution of marital property, an entirely new theory which considered all the circumstances of the case and of the respective parties to the marriage (Assembly Memorandum, 1980 NY Legis Ann, at 129-130). Equitable distribution was based on the premise that a marriage is, among other things, an economic partnership to which both parties contribute as spouse, parent, wage earner or homemaker (id., at 130; see, Governor’s Memorandum of Approval, 1980 McKinney’s Session Laws of NY, at 1863). Consistent with this purpose, and implicit in the statutory scheme as a whole, is the view that upon dissolution of the marriage there should be a winding up of the parties’ eco­nomic affairs and a severance of their economic ties by an equitable distribution of the marital assets. Thus, the concept of alimony, which often served as a means of lifetime support and dependence for one spouse upon the other long after the marriage was over, was replaced with the concept of mainte­nance which seeks to allow "the recipient spouse an opportu­nity to achieve [economic] independence” (Assembly Memoran­dum, 1980 NY Legis Ann, at 130).

The determination that a professional license is marital property is also consistent with the conceptual base upon which the statute rests. As this case demonstrates, few under­takings during a marriage better qualify as the type of joint effort that the statute’s economic partnership theory is in­tended to address than contributions toward one spouse’s acquisition of a professional license. Working spouses are often required to contribute substantial income as wage earn­ers, sacrifice their own educational or career goals and oppor­tunities for child rearing, perform the bulk of household duties and responsibilities and forego the acquisition of mari­tal assets that could have been accumulated if the professional spouse had been employed rather than occupied with the study and training necessary to acquire a professional license. In this case, nearly all of the parties’ nine-year marriage was devoted to the acquisition of plaintiff’s medical license and defendant played a major role in that project. She worked continuously during the marriage and contributed all of her earnings to their joint effort, she sacrificed her own educa­tional and career opportunities, and she traveled with plaintiff to Mexico for three and one-half years while he attended medical school there. The Legislature has decided, by its explicit reference in the statute to the contributions of one spouse to the other’s profession or career (see, Domestic Rela­tions Law § 236 [B] [5] [d] [6], [9]; [e]), that these contributions represent investments in the economic partnership of the marriage and that the product of the parties’ joint efforts, the professional license, should be considered marital property.

The majority at the Appellate Division held that the cited statutory provisions do not refer to the license held by a professional who has yet to establish a practice but only to a going professional practice (see, e.g., Arvantides v Arvantides, 64 NY2d 1033; Litman v Litman, 61 NY2d 918). There is no reason in law or logic to restrict the plain language of the statute to existing practices, however, for it is of little conse­quence in making an award of marital property, except for the purpose of evaluation, whether the professional spouse has already established a practice or whether he or she has yet to do so. An established practice merely represents the exercise of the privileges conferred upon the professional spouse by the license and the income flowing from that practice represents the receipt of the enhanced earning capacity that licensure allows. That being so, it would be unfair not to consider the license a marital asset.

Plaintiff’s principal argument, adopted by the majority be­low, is that a professional license is not marital property because it does not fit within the traditional view of property as something which has an exchange value on the open market and is capable of sale, assignment or transfer. The position does not withstand analysis for at least two reasons. First, as we have observed, it ignores the fact that whether a professional license constitutes marital property is to be judged by the language of the statute which created this new species of property previously unknown at common law or under prior statutes. Thus, whether the license fits within traditional property concepts is of no consequence. Second, it is an overstatement to assert that a professional license could not be considered property even outside the context of section 236 (B). A professional license is a valuable property right, reflected in the money, effort and lost opportunity for employ­ment expended in its acquisition, and also in the enhanced earning capacity it affords its holder, which may not be revoked without due process of law (see, Matter of Bender v Board of Regents, 262 App Div 627, 631; People ex rel. Green­berg v Reid, 151 App Div 324, 326). That a professional license has no market value is irrelevant. Obviously, a license may not be alienated as may other property and for that reason the working spouse’s interest in it is limited. The Legislature has recognized that limitation, however, and has provided for an award in lieu of its actual distribution (see, Domestic Relations Law § 236 [B] [5] [e]).

Plaintiff also contends that alternative remedies should be employed, such as an award of rehabilitative maintenance or reimbursement for direct financial contributions (see, e.g., Kutanovski v Kutanovski, 109 AD2d 822, 824; Conner v Con­ner, 97 AD2d 88, 101, supra; Lesman v Lesman, 88 AD2d 153, 158-159, supra). The statute does not expressly authorize retrospective maintenance or rehabilitative awards and we have no occasion to decide in this case whether the authority to do so may ever be implied from its provisions (but see, Cappiello v Cappiello, 66 NY2d 107). It is sufficient to observe that normally a working spouse should not be restricted to that relief because to do so frustrates the purposes underlying the Equitable Distribution Law. Limiting a working spouse to a maintenance award, either general or rehabilitative, not only is contrary to the economic partnership concept underly­ing the statute but also retains the uncertain and inequitable economic ties of dependence that the Legislature sought to extinguish by equitable distribution. Maintenance is subject to termination upon the recipient’s remarriage and a working spouse may never receive adequate consideration for his or her contribution and may even be penalized for the decision to remarry if that is the only method of compensating the contribution. As one court said so well, "[t]he function of equitable distribution is to recognize that when a marriage ends, each of the spouses, based on the totality of the contribu­tions made to it, has a stake in and right to a share of the marital assets accumulated while it endured, not because that share is needed, but because those assets represent the capital product of what was essentially a partnership entity” (Wood v Wood, 119 Misc 2d 1076, 1079). The Legislature stated its intention to eliminate such inequities by providing that a supporting spouse’s "direct or indirect contribution” be recog­nized, considered and rewarded (Domestic Relations Law § 236 [B] [5] [d] [6]).

Turning to the question of valuation, it has been suggested that even if a professional license is considered marital prop­erty, the working spouse is entitled only to reimbursement of his or her direct financial contributions (see, Note, Equitable Distribution of Degrees and Licenses: Two Theories Toward Compensating Spousal Contributions, 49 Brooklyn L Rev 301, 317-322). By parity of reasoning, a spouse’s down payment on real estate or contribution to the purchase of securities would be limited to the money contributed, without any remunera­tion for any incremental value in the asset because of price appreciation. Such a result is completely at odds with the statute’s requirement that the court give full consideration to both direct and indirect contributions "made to the acquisition of such marital property by the party not having title, includ­ing joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker” (Domestic Relations Law § 236 [B] [5] [d] [6] [emphasis added]). If the license is marital property, then the working spouse is enti­tled to an equitable portion of it, not a return of funds advanced. Its value is the enhanced earning capacity it affords the holder and although fixing the present value of that enhanced earning capacity may present problems, the prob­lems are not insurmountable. Certainly they are no more difficult than computing tort damages for wrongful death or diminished earning capacity resulting from injury and they differ only in degree from the problems presented when valu­ing a professional practice for purposes of a distributive award, something the courts have not hesitated to do (see, Arvantides v Arvantides, 64 NY2d 1033, supra; Litman v Litman, 93 AD2d 695, affd 61 NY2d 918, supra; Billington v Billington, 111 AD2d 203; Cohen v Cohen, 104 AD2d 841, appeal dismissed 64 NY2d 773; Nehorayoff v Nehorayoff, 108 Misc 2d 311). The trial court retains the flexibility and discre­tion to structure the distributive award equitably, taking into consideration factors such as the working spouse’s need for immediate payment, the licensed spouse’s current ability to pay and the income tax consequences of prolonging the period of payment (see, Internal Revenue Code [26 USC] § 71 [a] [1]; [c] [2]; Treas Reg [26 CFR] § 1.71-1 [d] [4]) and, once it has received evidence of the present value of the license and the working spouse’s contributions toward its acquisition and considered the remaining factors mandated by the statute (see, Domestic Relations Law § 236 [B] [5] [d] [1]-[10]), it may then make an appropriate distribution of the marital property including a distributive award for the professional license if such an award is warranted. When other marital assets are of sufficient value to provide for the supporting spouse’s equita­ble portion of the marital property, including his or her contributions to the acquisition of the professional license, however, the court retains the discretion to distribute these other marital assets or to make a distributive award in lieu of an actual distribution of the value of the professional spouse’s license (see, Majauskas v Majauskas, 61 NY2d 481, 493, su­pra).

III

Three additional issues remain for our consideration.

First, plaintiff notes that the statute requires the trial court to state the factors it considered and the basis for its decision in making distribution and that neither the parties nor coun­sel may waive that requirement (see, Domestic Relations Law § 236 [B] [5] [g]). He contends that the court failed to ade­quately do so in this case. We have held recently that while section 236 (B) (5) (g) does not require the court to analyze each of the factors stated in subdivision (5) (d) and give reasons as to each, it still must set forth all the factors it considered and the reason for its decision (Cappiello v Cap­piello, 66 NY2d 107, supra). Unless the trial judge reveals not only the factors he considered, but also his reasoning for the award made, intelligent review of the broad discretion en­trusted to him is not possible.

The evidence before the trial court in this case supported its factual findings but its decision does not indicate what factors it considered, or the weight it attributed to them, in making the distributive award to defendant. Nevertheless, the Appellate Division has the same authority to make an award of marital property as does the trial court (see, Majauskas v Majauskas, 61 NY2d 481, supra), and it may effectuate the award and set forth the factors it considers determinative and the reasons for its decision or it may remit the matter to Special Term for that purpose if it is unable to do so (see, Kobylack v Kobylack, 62 NY2d 399).

Plaintiff also contends that the trial court erred in excluding evidence of defendant’s marital fault on the ques­tion of equitable distribution. Arguably, the court may con­sider marital fault under factor 10, "any other factor which the court shall expressly find to be just and proper” (Domestic Relations Law § 236 [B] [5] [d] [10]; see, Scheinkman, 1981 Practice Commentary, McKinney’s Cons Laws of NY, Book 14, Domestic Relations Law C236B:13, pp 205-206 [1977-1984 Supp Pamphlet]). Except in egregious cases which shock the con­science of the court, however, it is not a "just and proper” factor for consideration in the equitable distribution of mari­tal property (Blickstein v Blickstein, 99 AD2d 287, 292, appeal dismissed 62 NY2d 802; see, Stevens v Stevens, 107 AD2d 987; Pacifico v Pacifico, 101 AD2d 709; McMahan v McMahan, 100 AD2d 826). That is so because marital fault is inconsistent with the underlying assumption that a marriage is in part an economic partnership and upon its dissolution the parties are entitled to a fair share of the marital estate, because fault will usually be difficult to assign and because introduction of the issue may involve the courts in time-consuming procedural maneuvers relating to collateral issues (see, Blickstein v Blick­stein, supra, at p 292; McMahan v McMahan, supra, at p 827). We have no occasion to consider the wife’s fault in this action because there is no suggestion that she was guilty of fault sufficient to shock the conscience.

Finally, plaintiff contends that the trial court erred in allowing defendant an award of counsel fees and defendant contends the Appellate Division erred in deleting the trial court’s award of expert witness fees. The decision to award either expert witness fees or attorney’s fees lies, in the first instance, in the discretion of the trial court and then in the Appellate Division whose discretionary authority is as broad as the trial court’s is (see, Domestic Relations Law § 237 [a], [c]; Majauskas v Majauskas, 61 NY2d 481, 493-494, supra,). Because the Appellate Division’s affirmance of the award of counsel fees cannot be characterized as an abuse of discretion as a matter of law, the issue is beyond our review (see, Majauskas v Majauskas, supra, at p 494; Patron v Patron, 40 NY2d 582). Its decision to delete the award of expert fees, as a matter of law, was apparently based on the fact that the expert’s testimony was directed solely to the value of plain­tiff’s license, evidence that was unnecessary in view of its determination that the license was not marital property. We have concluded that the license is marital property, however, and on remand the court may exercise its discretion to deter­mine whether an award of expert fees is warranted and if so their proper amount (see, Litman v Litman, 61 NY2d 918, supra).

Accordingly, in view of our holding that plaintiff’s license to practice medicine is marital property, the order of the Appel­late Division should be modified, with costs to defendant, by reinstating the judgment and the case remitted to the Appel­late Division for determination of the facts, including the exercise of that court’s discretion (CPLR 5613), and, as so modified, affirmed. Question certified answered in the nega­tive.

*

The action was originally instituted by plaintiff husband and defendant wife asserted a counterclaim in her answer. Subsequently, the husband withdrew his complaint and reply to the counterclaim and the wife received an uncontested divorce.

Meyer, J.

(concurring). I concur in Judge Simons’ opinion but write separately to point up for consideration by the Legislature the potential for unfairness involved in distribu­tive awards based upon a license of a professional still in training.

An equity court normally has power to "'change its decrees where there has been a change of circumstances’” (People v Scanlon, 11 NY2d 459, 462, on second appeal 13 NY2d 982). The implication of Domestic Relations Law § 236 (B) (9) (b), which deals with modification of an order or decree as to maintenance or child support, is, however, that a distributive award pursuant to section 236 (B) (5) (e), once made, is not subject to change. Yet a professional in training who is not finally committed to a career choice when the distributive award is made may be locked into a particular kind of practice simply because the monetary obligations imposed by the distributive award made on the basis of the trial judge’s conclusion (prophecy may be a better word) as to what the career choice will be leaves him or her no alternative.

The present case points up the problem. A medical license is but a step toward the practice ultimately engaged in by its holder, which follows after internship, residency and, for particular specialties, board certification. Here it is undisputed that plaintiff was in a residency for general surgery at the time of the trial, but had the previous year done a residency in internal medicine. Defendant’s expert based his opinion on the difference between the average income of a general sur­geon and that of a college graduate of plaintiff’s age and life expectancy, which the trial judge utilized, impliedly finding that plaintiff would engage in a surgical practice despite plaintiff’s testimony that he was dissatisfied with the general surgery program he was in and was attempting to return to the internal medicine training he had been in the previous year. The trial judge had the right, of course, to discredit that testimony, but the point is that equitable distribution was not intended to permit a judge to make a career decision for a licensed spouse still in training. Yet the degree of speculation involved in the award made is emphasized by the testimony of the expert on which it was based. Asked whether his assump­tions and calculations were in any way speculative, he replied: "Yes. They’re speculative to the extent of, will Dr. O’Brien practice medicine? Will Dr. O’Brien earn more or less than the average surgeon earns? Will Dr. O’Brien live to age sixty-­five? Will Dr. O’Brien have a heart attack or will he be injured in an automobile accident? Will he be disabled? I mean, there is a degree of speculation. That speculative aspect is no more to be taken into account, cannot be taken into account, and it’s a question, again, Mr. Emanuelli, not for the expert but for the courts to decide. It’s not my function nor could it be.”

The equitable distribution provisions of the Domestic Rela­tions Law were intended to provide flexibility so that equity could be done. But if the assumption as to career choice on which a distributive award payable over a number of years is based turns out not to be the fact (as, for example, should a general surgery trainee accidentally lose the use of his hand), it should be possible for the court to revise the distributive award to conform to the fact. And there will be no unfairness in so doing if either spouse can seek reconsideration, for the licensed spouse is more likely to seek reconsideration based on real, rather than imagined, cause if he or she knows that the nonlicensed spouse can seek not only reinstatement of the original award, but counsel fees in addition, should the pur­ported circumstance on which a change is made turn out to have been feigned or to be illusory.

Titone, J.

(concurring). I join in the majority opinion by Judge Simons for the court, and, like Justice Jackson, forth­rightly surrender my contrary views in Conner v Conner (97 AD2d 88, 105 [Titone, J. P., concurring]) to a more cogent position (McGrath v Kristensen, 340 US 162, 178 [Jackson, J., concurring]).

Chief Judge Wachtler and Judges Jasen, Meyer, Kaye, Alexander and Titone concur with Judge Simons; Judges Meyer and Titone concur in separate concurring opinions.

Order modified, with costs to defendant, and case remitted to the Appellate Division, Second Department, for further proceedings in accordance with the opinion herein and, as so modified, affirmed. Question certified answered in the nega­tive.

District Court of Appeal of Florida, Fifth District.

No. 96-2192.

Emma POSIK, Appellant, v. Nancy L.R. LAYTON, Appellee.

March 27, 1997.

Rehearing Denied June 11, 1997.

GOSHORN, J., concurs.

PETERSON, C.J., concurs specially, with opinion.

Herbert L. Allen, Jr. of Allen & Billington, P.A., Indian Harbour Beach, for Appellant Emma Posik.

J. John Barker, Melbourne, for Appellee.

HARRIS, Judge.

Emma Posik and Nancy L.R. Layton were close friends and more. They entered into a support agreement much like a prenuptial agreement. The trial court found that the agreement was unenforceable because of waiver. We reverse.

Nancy Layton was a doctor practicing at the Halifax Hospital in Volusia County and Emma Posik was a nurse working at the same facility when Dr. Layton decided to remove her practice to Brevard County. In order to induce Ms. Posik to give up her job and sell her home in Volusia County, to accompany her to Brevard County, and to reside with her “for the remainder of Emma Posik’s life to maintain and care for the home,” Dr. Layton agreed that she would provide essentially all of the support for the two, would make a will leaving her entire estate to Ms. Posik, and would “maintain bank accounts and other investments which constitute non-probatable assets in Emma Posik’s name to the extent of 100% of her entire non-probatable assets.” Also, as part of the agreement, Ms. Posik agreed to loan Dr. Layton $20,000 which was evidenced by a note. The agreement provided that Ms. Posik could cease residing with Dr. Layton if Layton failed to provide adequate support, if she requested in writing that Ms. Posik leave for any reason, if she brought a third person into the home for a period greater than four weeks without Ms. Posik’s consent, or if her abuse, harassment or abnormal behavior made Ms. Posik’s continued residence intol­erable. In any such event, Dr. Layton agreed to pay as liquidated damages the sum of $2,500 per month for the remainder of Ms. Posik’s life.

It is apparent that Ms. Posik required this agreement as a condition of accompanying Dr. Layton to Brevard. The agreement was drawn by a lawyer and properly witnessed. Ms. Posik, fifty-five years old at the time of the agreement, testified that she required the agreement because she feared that Dr. Layton might become interested in a youn­ger companion. Her fears were well found­ed. Some four years after the parties moved to Brevard County and without Ms. Posik’s consent, Dr. Layton announced that she wished to move another woman into the house. When Ms. Posik expressed strong displeasure with this idea, Dr. Layton moved out and took up residence with the other woman.

Dr. Layton served a three-day eviction notice on Ms. Posik. Ms. Posik later moved from the home and sued to enforce the terms of the agreement and to collect on the note evidencing the loan made in conjunction with the agreement. Dr. Layton defended on the basis that Ms. Posik first breached the agreement. Dr. Layton counterclaimed for a declaratory judgment as to whether the liqui­dated damages portion of the agreement was enforceable.

The trial judge found that because Ms. Posik’s economic losses were reasonably as­certainable as to her employment and reloca­tion costs, the $2,500 a month payment upon breach amounted to a penalty and was there­fore unenforceable. The court further found that although Dr. Layton had materially breached the contract within a year or so of its creation, Ms. Posik waived the breach by acquiescence. Finally, the court found that Ms. Posik breached the agreement by refus­ing to continue to perform the house work, yard work and cooking for the parties and by her hostile attitude which required Dr. Lay­ton to move from the house. Although the trial court determined that Ms. Posik was entitled to quantum meruit, it also deter­mined that those damages were off-set by the benefits Ms. Posik received by being permitted to live with Dr. Layton. The court did award Ms. Posik a judgment on the note executed by Dr. Layton.

Although neither party urged that this agreement was void as against public policy, Dr. Layton’s counsel on more than one occa­sion reminded us that the parties had a sexual relationship. Certainly, even though the agreement was couched in terms of a personal services contract, it was intended to be much more. It was a nuptial agreement entered into by two parties that the state prohibits from marrying. But even though the state has prohibited same-sex marriages and same-sex adoptions, it has not prohibited this type of agreement. By prohibiting same-sex marriages, the state has merely denied homosexuals the rights granted to married partners that flow naturally from the marital relationship. In short, “the law of Florida creates no legal rights or duties between live-ins.” Lowry v. Lowry, 512 So.2d 1142 (Fla. 5th DCA 1987). (Sharp, J., concurring specially). This lack of recogni­tion of the rights which flow naturally from the break-up of a marital relationship applies to unmarried heterosexuals as well as homo­sexuals. But the State has not denied these individuals their right to either will their property as they see fit nor to privately commit by contract to spend their money as they choose. The State is not thusly condon­ing the lifestyles of homosexuals or unmar­ried live-ins; it is merely recognizing their constitutional private property and contract rights.

Even though no legal rights or obli­gations flow as a matter of law from a non-­marital relationship, we see no impediment to the parties to such a relationship agreeing between themselves to provide certain rights and obligations. Other states have approved such individual agreements. In Marvin v. Marvin, 18 Cal.3d 660, 134 Cal.Rptr. 815, 557 P.2d 106 (1976), the California Supreme Court held:

[W]e base our opinion on the principle that adults who voluntarily live together and engage in sexual relations are nonetheless as competent as any other persons to con­tract respecting their earnings and proper­ty rights....So long as the agreement does not rest upon illicit meretricious con­sideration, the parties may order their eco­nomic affairs as they choose....

In Whorton v. Dillingham, 202 Cal.App.3d 447, 248 Cal.Rptr. 405 (1988), the California Fourth District Court of Appeal extended this principle to same-sex partners. We also see no reason for a distinction.

The Ohio Court of Appeal also seemed to recognize this principle in Seward v. Ment­rup, 87 Ohio App.3d 601, 622 N.E.2d 756, 757 (1993):

Appellant contends that she is entitled to a legal or equitable division of the property accumulated by the parties’ joint efforts during the time they lived together. It is appellant’s belief that her relationship with appellee was “more like a marriage,” and that consequently, she is entitled to reim­bursement for money she contributed to­ward capital improvements to appellee’s residence....

The evidentiary materials clearly indicate that there were no written contracts or agreements governing the parties’ [lesbi­an] relationship...

Based upon Lauper [v. Harold, 23 Ohio App.3d 168, 492 N.E.2d 472, 474 (1985)], a property division, per se, applies only to marriages. We see no reason to deviate from this position. Accordingly, the trial court had no authority to divide property absent a marriage contract or similar agreement, and the court correctly granted summary judgment to appellee on appel­lant’s breach of contract claim. (Emphasis added).

In a case involving unmarried heterosexu­als, a Florida appellate court has passed on the legality of a non-marital support agree­ment. In Crossen v. Feldman, 673 So.2d 903 (Fla. 2d DCA 1996), the court held:

Without attempting to define what may or may not be “palimony,” this case simply involves whether these parties entered into a contract for support, which is something that they are legally capable of doing.

Addressing the invited issue, we find that an agreement for support between unmarried adults is valid unless the agree­ment is inseparably based upon illicit consid­eration of sexual services. Certainly prosti­tution, heterosexual or homosexual, cannot be condoned merely because it is performed within the confines of a written agreement. The parties, represented by counsel, were well aware of this prohibition and took pains to assure that sexual services were not even mentioned in the agreement. That factor would not be decisive, however, if it could be determined from the contract or from the conduct of the parties that the primary rea­son for the agreement was to deliver and be paid for sexual services. See Bergen v. Wood, 14 Cal.App.4th 854, 18 Cal.Rptr.2d 75 (1993). This contract and the parties’ testi­mony show that such was not the case here. Because of the potential abuse in marital-­type relationships, we find that such agree­ments must be in writing. The Statute of Frauds (section 725.01, Florida Statutes) re­quires that contracts made upon consider­ation of marriage must be in writing. This same requirement should apply to non-mari­tal, nuptial-like agreements. In this case, there is (and can be) no dispute that the agreement exists.

The obligations imposed on Ms. Posik by the agreement include the obligation “to immediately commence residing with Nancy L.R. Layton at her said residence for the remainder of Emma Posik’s life....” This is very similar to a “until death do us part” commitment. And although the parties un­doubtedly expected a sexual relationship, this record shows that they contemplated much more. They contracted for a permanent sharing of, and participating in, one another’s lives. We find the contract enforceable.

We disagree with the trial court that waiver was proved in this case. Ms. Posik consistently urged Dr. Layton to make the will as required by the agreement and her failure to do so was sufficient grounds to declare default. And even more important to Ms. Posik was the implied agreement that her lifetime commitment would be recipro­cated by a lifetime commitment by Dr. Lay­ton—and that this mutual commitment would be monogamous. When Dr. Layton intro­duced a third person into the relationship, although it was not an express breach of the written agreement, it explains why Ms. Posik took that opportunity to hold Dr. Layton to her express obligations and to consider the agreement in default.

We also disagree with the trial court that Ms. Posik breached the agreement by refusing to perform housework, yard work, provisioning the house, and cooking for the parties. This conduct did not occur until after Dr. Layton had first breached the agreement. One need not continue to per­form a contract when the other party has first breached. City of Miami Beach v. Car­rier, 579 So.2d 248 (Fla. 3d DCA 1991). Therefore, this conduct did not authorize Dr. Layton to send the three-day notice of evic­tion which constituted a separate default un­der the agreement.

We also disagree that the commit­ment to pay $2,500 per month upon termi­nation of the agreement is unenforceable as a penalty. We agree with Ms. Posik that her damages, which would include more than mere lost wages and moving expenses, were not readily ascertainable at the time the con­tract was created. Further, the agreed sum is reasonable under the circumstances of this case. It is less than Ms. Posik was earning some four years earlier when she entered into this arrangement. It is also less than Ms. Posik would have received had the long-­term provisions of the contract been per­formed. She is now in her sixties and her working opportunities are greatly reduced.

We recognize that this contract, insisted on by Ms. Posik before she would relocate with Dr. Layton, is extremely favorable to her. But there is no allegation of fraud or over­reaching on Ms. Posik’s part. This court faced an extremely generous agreement in Cornell v. Cornell, 398 So.2d 503 (Fla. 5th DCA 1981). In Cornell, a lawyer, in order to induce a woman to become his wife, agreed that upon divorce the wife would receive his home owned by him prior to marriage, one-­half of his disposable income and one-half of his retirement as alimony until she remar­ried. Two years after the marriage, she tested his commitment. We held:

The husband also contends that the agree­ment is so unfair and unreasonable that it must be set aside...“The freedom to contract includes the right to make a bad bargain.” (Citation omitted). The con­trolling question here is whether there was overreaching and not whether the bargain was good or bad.

398 So.2d at 506.

Contracts can be dangerous to one’s well-­being. That is why they are kept away from children. Perhaps warning labels should be attached. In any event, contracts should be taken seriously. Dr. Layton’s comment that she considered the agreement a sham and never intended to be bound by it shows that she did not take it seriously. That is regret­table.

We affirm that portion of the judgment below which addresses the promissory note and attorney’s fees and costs associated therewith. We reverse that portion of the judgment that fails to enforce the parties’ agreement.

AFFIRMED in part; REVERSED in part and REMANDED for further action consistent with this opinion.

PETERSON, Chief Judge,

concurring specially.

Partially quoting from Crossen v. Feld­man, 673 So.2d 903 (Fla.2d DCA 1996), “this case simply involves whether [Emma Posik and Nancy L. R. Layton]...entered into a contract for support, which is something that they are legally capable of doing.”

In the instant case, two persons entered into a lifetime personal services contract—Posik managed a household exclusively for Layton, who was engaged in a demanding medical practice, and Layton was to provide monetary support and living quarters for Posik, who sacrificed her own professional career as a nurse to manage a household. Posik’s reward, if she outlived Layton, and if Layton fared well in her professional endeav­ors, was a golden parachute—Layton’s assets upon Layton’s death. Each and every term of this agreement could have been included in one between a single invalid or an elderly married couple who seek the companionship and household services of a housekeeper, cook or a practical or professional nurse, in which no sexual relationship was involved.

The result reached by us in this case should not be interpreted as anything more than a recognition that legally competent individuals may exercise their constitutional private property and contract rights. Much has been included in the opinion about the lifestyles of the litigants in this case because of arguments presented at trial and on ap­peal. But as Judge Harris accurately points out, neither this contract, nor the parties’ testimony, reflects that the reason for this agreement was the delivery and payment for a sexual relationship or a same sex marriage, both of which are not recognized by the laws of Florida.