By Steven J. Gibbs, Esq.
One Florida legal question that is often asked, and is the subject of some debate within the Florida legal community, is whether a Homestead in Florida should be titled into a revocable living trust?
Defining a Florida Resident
In Florida, a homestead is generally understood as one’s personal place of residence. This means that one would need to be a Florida resident in order to claim a Florida homestead. A Florida resident is defined as someone who lives (is present) in Florida for at least 6 months and 1 day of the calendar year. The idea is that the person spends the “majority” of his/her time in Florida during the year.
With an established Florida residency, the next question is how to determine a Florida homestead. From this question springs the subject of this article, of whether you can title your Florida homestead in a revocable living trust in Florida.
Florida’s Unique Homestead Protection
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 judgments 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.
Florida Court Decisions About Revocable Living
Trusts and Homestead Protection
Whether to Title a Florida Homestead in a Florida Living Trust Has Been Questioned Due to an Early by the Bankruptcy Court Ruling in this District.
Without diving into too much legalese, there was a decision by a bankruptcy court judge in a case called In re Bosonetto. In that case, the judge found that because the homestead in that case was held by a trust and not a “natural person”, the homestead protection did not apply. On this basis, the court allowed a creditor to force the sale of the home in order to pay debts. This result is, of course, something to avoid as part of a complete Florida asset protection plan.
The good news is since Bosonetto, 5 Florida courts (2 of which were bankruptcy judges) have opted NOT to follow that case, and have expressly determined that property held in a revocable living trust is exempt from forced sale under Florida homestead laws.
For you legal researcher types, the cases to review are as follows:
Callava v. Feinberg
Engelke v. Estate of Engelke
In Re Alexander
In Re Edwards
Cutler v. Cutler
Making an Informed Decision [Whether to Title your Homestead in a Revocable Trust]
The important thing to understand when making this decision, in light of the legal insight discussed in this article, are the pros and cons of titling your homestead in your revocable living trust.
Revocable Trust Titling Pros
Avoid Probate Administration
Flexible Distribution Plan
Revocable Trust Titling Cons
Florida Supreme Court Question
Potential Decreased Asset Protection
Summarizing the pros and cons, it is often very advantageous to title a Florida homestead in a revocable trust due to the major benefit of avoiding the Florida probate administration process in favor of a much simpler Florida trust administration. In addition, the flexibility of a revocable trust allows distribution planning options in the event of a special needs beneficiary in Florida OR if added protection is needed for IRA beneficiaries, estate planning in Florida for second marriages, and the list goes on.
However, when weighing pros and cons, those in high risk professions such as doctors OR contractors might consider opting to leave the homestead out of the revocable trust as an extra precaution.
Is there much of a chance that the Florida Supreme Court could overturn the decisions in favor of the Florida homestead and revocable trusts. It wouldn’t seem likely to this lawyer due to the court’s general understanding that a revocable trust is not really a separate entity from the trustmaker who is also the original owner of the homestead. Still, because we’re speculating, it is important to have all the facts and make an informed decision.
As a side note…you need to be sure to understand the difference between revocable and irrevocable trusts in Florida because homestead protection is NOT available for property in an irrevocable trust.
Another legal nugget…recent Florida legislation also allows a homestead to be afforded full protection if held in a Florida land trust.
Finally, it is very important to understand the spousal rules around the Florida homestead in order plan accordingly.
So, if your Florida homestead is not in your living trust, you should have your favorite Florida estate planning attorney review this as part of your regular estate planning health and wellness checkup.
Steven J. Gibbs is a trust and estate planning attorney who provides complete Estate Planning, Trust Planning, Business Planning, Asset Protection, Elder and Medicaid Planning, Real Estate, Probate and Trust Administration legal services in Florida and California. Steve’s main offices are located in Fort Myers, Florida, and San Juan Capistrano, California. Estate planning legal services are provided statewide in these locations.
The Gibbs Law Office was founded by Steven Gibbs in January 2009 upon the commitment to provide client-centered legal services.
Steven Gibbs founded the Gibbs Law Office in January 2009, committed to providing client-centered legal services.
Steve as he would rather be called, is not your typical attorney. If you appreciate the staunch egotistical mannerism of most firms, you will be delighted with Steve’s unpretentious approach to educating and then assisting his client. Instead of giving you his complacent and lofty ideas, he would rather pursue your expec
tations with professional conversation about resolving your concerns under the Law. It’s your life and it’s his job to make your legal expectations come true while using years of his guidance and knowledge.
Steve was admitted to the Minnesota Bar in 1999, the Florida Bar in 2007 and was admitted to the California State Bar in 2014.
Along his career path, he was an associate attorney for an insurance defense law firm; an in-house real estate negotiator for Target Corporation; and corporate counsel for Civix, LLC and Vice President for North American Properties where he was responsible for various real estate transactions, including legal issues and negotiating unresolved business issues. Prior to opening Gibbs Law Office, PLLC, he was an associate with the firm of Roberts & Engvalson, P.A. where he gained his knowledge of trusts, estate planing and Wills. He opened his own firm in 2008 and now focuses on laws that will enrich the needs of his clients throughout their lives and those of their children. The firm has developed a practice dealing only with Trusts and Estate Planning, Wills, Medicaid Planning, Elder Law, Real Estate, Business Law and Probate.
Quoting from Steve “I decided to practice in areas that families will need as they progress down life’s path. To help them with a solid foundation that will carry them throughout there lives is a rewarding experience for me and my staff.”
GIBBS LAW OFFICE
Steven J. Gibbs, Esq.