Florida law prohibits the devise of a homestead if the owner is survived by a minor child or children. For purposes of this prohibition, the term “devise” extends to both gifts under a will and transfers by way of a revocable trust. As such, Florida homesteaders with minor children are tightly restricted in their ability to transfer the homestead upon death.
An improperly devised homestead descends in accordance with Florida’s intestacy laws, which generally provide for a life estate in the surviving spouse and a vested remainder in the decedent’s lineal descendants. Therefore, an improper devise of a Florida homestead can frustrate a person’s dispositive wishes, potentially resulting in complicated, unanticipated and unwelcomed issues regarding the marketable title, use, and ownership of the homestead. The homestead restrictions can be especially problematic for funding credit shelter trusts, special needs trust planning, and qualified personal residence trust planning.
Florida law offers several options for planning around the homestead restrictions. One of the most useful options involves irrevocable trust planning. Under Florida law, if a homeowner conveys his or her interest in a homestead to an irrevocable trust without retaining any power to revoke or revest such interest, the transfer to the trust is not considered a devise, and the disposition of the homestead interest as directed by the trust will be respected.
Irrevocable trusts are, of course, less flexible than their revocable counterparts. Nevertheless, Florida law offers homeowners several elements of flexibility in the irrevocable trust planning. For example, the owner of a homestead property may:
- Retain the power to alter the beneficial use and enjoyment of the homestead within a class of beneficiaries identified in the trust, subject to certain limitations;
- Retain a term of years or a lifetime interest;
- Delay possession until a date certain; or
- Subject the interest to divestment or lapse.
With all that said, irrevocable trust planning is not without its disadvantages and uncertainties. For example, a homestead owned by an irrevocable trust (depending on the terms of the trust) may or may not qualify for the homestead property tax exemption or creditor protections granted by the Florida Constitution. Thus, if you own Florida homestead property and may be survived by a minor child or children, you may want to review the disposition of the homestead under Florida law to ensure it meets with your objectives. To discuss this issue in greater detail, please contact Anthony J. Scaletta at ascaletta@bakerlaw.com or 407.649.4026 or Jessica Captain Novick at jcaptainnovick@bakerlaw.com or 407.649.4025.