Homestead Planning in Florida
Homestead Planning in Florida
The Florida Constitution (Article X, Section 4) protects the homesteads of Floridians from being taken by creditors for the payment of debts. With no financial limitation on the homestead’s market value, this has proven to be a major tool for the protection of assets in the State of Florida.
However, some limitations do apply. After the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, creditors may push to have the homestead sold in certain bankruptcy proceedings. Likewise, some federal creditors (like the Internal Revenue Service) and some lien holders (mortgagee, certain mechanic’s liens) may be able to look to Florida homesteads for payment of debts.
For purposes of estate planning, the Florida homestead protections are extremely important. Florida Statute §732.4015 provides that a decedent’s homestead shall not be subject to devise if the owner (decedent) is survived by a spouse OR minor child. In that scenario, the spouse would receive a life estate in the property and the minor child(ren) would receive the remainder interest. However, if the decedent is survived by a spouse and there is no minor child, then the property may be devised 100% to the spouse.
Importantly for strategic estate planning purposes, not only does a Florida homestead legally not have any market value parameters and avoid estate taxation by being exempt from the estate, the definition of what can constitute a “homestead” under Florida law is very broad. To qualify under Florida law as a homestead, the property must be less than or equal to 160 acres if it is located outside a municipality. If it is within city limits, then its size can only be ½ acre or less. This allows estate planning to be very creative on what assets will be segregated as the “homestead.” Obviously, an area of legal complexity, an expert attorney’s analysis is particularly necessary when considering such issues as whether homesteads can be certain condominiums or houseboats, and whether the property owner lives in Florida full-time (“snowbird issues”).
At the Law Offices of Adrian Philip Thomas, P.A. we consider it an honor to be of assistance to you.
