Excerpt from Chapter 5, Estate Planning and Asset Protection in Florida: A Plan to Survive Unexpected Financial Threats by Barry A. Nelson
Available at http://www.jurispub.com/Bookstore/Regions-Jurisdictions/Estate-Planning-and-Asset-Protection-in-Florida.html
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Chapter 5 - Table of Contents
5-1 Introduction
5-2 Constitutional Limits on Devise of Homestead
5-3 Who Receives Homestead if No Specific Devise and No Spouse or Minor Children?
5-4 Restrictions on the Mortgaging of Homestead
5-5 Inter Vivos Transfer of Homestead to Avoid Outright Distribution of Homestead
5-6 Personal Representative Not Authorized to Sell Homestead Property
5-7 Homestead Rights Exist in Absence of a Court Order
5-8 Co-Ops and Confusion
5-9 Direction to Pay Debts from Homestead
5-10 Planning
5-1 Introduction
This chapter describes restrictions on a homestead owner’s ability to alienate or devise a homestead under Florida law. Many attorneys, especially those licensed in Florida but who practice primarily outside of Florida and attorneys licensed in states other than Florida, are caught by surprise when a Will or trust provision conveying a homestead is ineffective as a result of Florida’s constitutional restrictions on the devise of homestead as described below.
5-1.1 What are the Greatest Traps for the Homestead Owner for Devise Purposes?
Depending on the circumstances a devise of homestead in a Will or trust may be invalid. Homestead cannot be validly devised if the homestead owner is survived by a spouse or minor child. However, homestead can be validly devised to the homestead owner’s spouse if the homestead owner is not survived by a minor child.
If the homestead owner is survived by a minor child and a spouse, the surviving spouse receives a life estate and a vested remainder passes to the homestead owner’s lineal descendants in being at the time of the homestead owner’s death, per stirpes. The spouse can elect under Florida Statute § 732.401(2) to instead receive an undivided one-half interest in the homestead as tenants in common with the remaining one-half interest vesting in decedent’s descendants in being at the time of the decedent’s death, per stirpes.
If the homestead owner is not survived by a spouse and has at least one minor child, the homestead will pass to the homestead owner’s lineal descendants in being at the time of the homestead owner’s death, per stirpes. If the homestead owner is not survived by a spouse or minor child, the owner’s homestead is freely devisable to anyone.
5-1.2 What are the Biggest Traps for Professionals Advising Clients on How To Devise Their Homestead?
Generally, homestead property is not regarded as an asset of the probate estate and therefore is not subject to administration or the claims of creditors of the estate. As discussed in Chapter 2, homestead enjoys broad protection from creditors. However, homestead loses its protected homestead status and becomes subject to the claims of creditors if the decedent, who is not survived by a spouse or minor children, directs by Will that the homestead be sold and the proceeds divided. Thus, directing the sale of homestead is not a safe option if there are any creditor concerns.
Because a homestead is not subject to devise if the owner is survived by a minor child, the homestead owner’s dispositive provisions, such as a Will or trust provision leaving such owner’s homestead to a protective trust created for his or her children, will be ineffective. Instead, if the homestead owner is not survived by a spouse the homestead passes outright to the homestead owner’s descendants, per stirpes, with the interest of the minor child being held by such child’s guardian until the minor reaches age 18. As discussed below, this can result in an 18 year old receiving too much too soon and could also result in reduced public assistance benefits for children or adults with disabilities. Attorneys unaware of these limitations on devise can find themselves faced with the homestead owner’s intended beneficiary filing a malpractice claim against the drafting attorney where the devise drafted by such attorney is ineffective.
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Disclaimer: This information has been prepared for educational purposes only and is not offered, nor should be construed, as legal advice. Use of this information without careful analysis and review by your attorney, CPA, and/or financial advisor may cause serious adverse consequences. We provide absolutely no warranty or representation of any kind, whether express or implied, concerning the appropriateness or legal sufficiency of this information as to any individual’s tax and related planning.
