Monday, June 10, 2013

Should I put my Florida homestead in my living trust?

Hello Mumbo Jumbo-ites!

So I'm fighting off the Florida summer heat and the doldrums to continue to deliver great estate planning content to you offered like no other law firm.  

One question that has often come into my practice, and has actually been the subject of some debate within the legal community, is whether a Florida Homestead should be titled into a revocable living trust?  

This question arises due in large part to the unique homestead protection offered under the Florida Constitution.  First, when we talk about homestead protection in this context we are not talking about the tax exemption status offered by the county of residence.  Rather homestead protection in this context refers to the protection against creditor attachment or protection against liens and/or judgements filed against the homestead by a creditor of the homeowner. 

Florida is unique in offering 100% homestead protection provided the real property meets the requirements of 1/2 acre within a municipality or not more than 160 acres outside of a municipality. 

Where things got a bit dicey for awhile related to an inconsistency between the 4th Circuit which held that homestead protections were secure within a living trust and a Federal bankruptcy case which seemed to suggest the opposite. Consequently many practitioners were opting not to title homestead property  into living trusts for many years. The inconsistency in the court decisions has since been remedied such that now it is clear that full homestead protection is afforded to homestead real property that is held within a revocable living trust.  

As a side note...you need to be sure to understand the difference between a revocable and irrevocable trust because the homestead protection is not available for irrevocable trusts.  

Another nugget...recent Florida legislation also allows a homestead to be afforded full protection if held in a Florida Land Trust...the topic of a future article. 

The take away is that if your homestead is not in your revocable living trust you should have it looked at by your favorite Florida estate planning attorney, hint, hint...

Until next time friends.

SJG


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