. If it is “other” homestead, the rule does not require it be reported on the inventory as homestead at all, and it would be reported under the section appearing on The Florida Bar form entitled “REAL ESTATE IN FLORIDA—Non-Homestead.” My interpretation of the correct procedure as discussed in the committee note and as called for by The Florida Bar form is: If the exemption has inured to a qualified person, the property is reported on the form as “REAL ESTATE IN FLORIDA—Homestead” but if not, the property is reported as REAL ESTATE IN FLORIDA— Non-Homestead. Similarly, a bankruptcy court held that, after a separation by two spouses, each would be able to claim a homestead in a home even though the net effect would be to exempt two homesteads where both had filed separate bankruptcies.17. §733.608. S.D. The second $25,000 excludes School Board taxes and applies to properties with assessed values greater than $50,000. 2) It is not subject to the claims of decedent’s creditors. LEXIS 547, at *4 (Bankr. Thus, assuming the size of the homestead does not exceed 160 acres, homeowners need not be concerned whether they will lose their homestead protection if they live in a home that exceeds one-half acre within an unincorporated area that later becomes a municipality. Estate of Murph y, 340 So. §733.817(l)(d) which provides that “[r]eal property homesteads that are exempt from execution by law shall be exempt from apportionment of taxes.” This is one unique statutory expression that recognizes that some decedent’s homesteads are not exempt from execution (the exemption did not inure) and are then subject to the requirement to contribute to the payment of tax. Fla. 1998) (“under §522(b), the lack of a domicile in any state within the 180-day period immediately preceding the filing of the petition is fatal to any right of exemption under the laws of the state); In re Dixson , 153 B.R. While there may be merit from a financial and tax standpoint to place a large mortgage on a homestead, those concerned with asset protection may find that having no mortgage, or a small mortgage, on their homestead provides peace of mind that is more important than the tax and financial advantages. Florida law provides for lower property tax assessments on homestead property. 2d 340, 342 (Fla. 1982), reasoned that “unless the debtor is issued such permanent status, the alien debtor cannot legally formulate the requisite intent to make the house the family’s permanent residence, regardless of the debtor’s subjective intention to remain indefinitely.” Accordingly, in In re Boone, 134 B.R. In Mrs. Noname’s instance, the property is devised by art. S.D. The material quoted from Spitzer is exactly correct as regards the law where the decedent is survived by a spouse. 1018 (Bankr. The title to the property passes instantly at death pursuant to the will (if the estate is testate) or pursuant to the intestacy statute (if the estate is intestate) to the beneficiary or the heir. The additional $25,000 exemption is available for non-school taxes and applies only to the assessed value between $50,000 and $75,000. Whether the residence is within or without a municipality is of critical importance in determining the portion of the debtor’s homestead that will be protected. Assuming the residency/domiciliary requirement is satisfied, separated married couples may find themselves in the situation of benefiting from two homestead exemptions. We are providing this application in an attempt to make filing for homestead exemption and other personal exemptions a little more convenient for you, the property owner. VIII (the residuary clause) of her last will and testament to Downsouth Bank Trust Company, N.A. The Washington Post,2 on July 12, 2002, reported that Scott D. Sullivan, former CFO of WorldCom, is building a $15 million Boca Raton “mansion” that may qualify for homestead exemption status. Authority: In re Estate of Price v. West Florida Hospital, Inc., 513 So. The Property Appraiser mails Homestead Exemption … X, §4 and its legislative implementation by the F.S. . 1996). X, §4 and its legislative implementation by the F.S. It is my practice to report the dece dent’s homestead on which the exemption has inured to a qualified person or persons (Scenarios 1, 2, and 3) in the homestead subdivision of the Bar form, and to report nonexempt homestead (Scenarios 4 and 4A) in the nonhomestead subdivision. , 166 B.R. 190 (Bankr. M.D. This is commonly referred to as “Homestead Exemption”. This is possible here and the ultimate answer is that if the property is subject to claims of creditors then it is subject to probate, and if it is not subject to creditors’ claims, it is not subject to probate. 1990), available from CLE Publications. This supports the conclusions to the items 3 in the scenarios above. If homestead protection for asset protection purposes is an objective, the safest manner in which to hold title is in an individual capacity or as tenants by the entirety for a husband and wife, and not through a trust, corporation, partnership, LLC, or other business entity. Fla. 1995). M.D. 159, 160–62 (1993) for a discussion on activities which can help establish a new domicile such as, but not limited to, obtaining a drivers license and voters registration card, filing income tax returns and paying tax in the domicile of choice; Wells v. Vallier , 773 So. Barry A. Nelson is founder of the law offices of Nelson & Levine, P.A. 361, 363 (Bankr. 1997) (“change of residence is accomplished and becomes effective when there is a good faith intention to establish it, coupled with the actual physical move to a new residence, as evidenced by positive overt acts”). 2d 192 (Fla. 5th DCA 1989). Similarly, the Florida Supreme Court ordered the division and sale of property when a portion of the property was not being used as homestead. Otherwise, the trustee was authorized to sell the homestead (as set forth in, ) and “the Court will apportion the proceeds accordingly.”. He prefaces the earlier statement with: “[t]he reported Florida appellate cases, when dealing with devisable homesteads, have given mixed and sometimes confusing signals on whether the [decedent’s] homestead is a probatable asset which would allow a personal representative to deal with and sell the homestead property.”. For example, in 1991, The New York Times reported that Bowie Kuhn, the former Major League Baseball Commissioner, had sold his $1.2 million New Jersey home and within weeks had bought a similar estate in Florida to shield his assets before then filing for bankruptcy.3 These and many other articles express concern that debtors can avoid creditors by moving to Florida, purchasing a new home and establishing residency. 1962). Kevin E. Packman is an associate with the law offices of Nelson & Levine, P.A. He is board certified in both taxation and wills, trusts and estates. We will also discuss planning issues for homestead and potential conflicts that can arise between the attorney, CPA, and financial planner when providing advice on homestead exemption planning. 1999), held that a married couple living in separate residences for over three years prior to the filing of their respective bankruptcy petitions qualified for homestead protection for each residence because there was no showing of fraudulent intent behind their marital separation. N.D. Ohio 2000) (holding that because debtor’s bankruptcy petition and related documents stated debtors domicile to be in one state, debtor could not claim the homestead exemption of another state even if debtor had an intent to return to the state where her residence was located. This article is adapted from Law Note 19, Florida Bar Probate System (2d ed. To aid in understanding the answers to the three questions posed above, perhaps some contextual definitions are necessary. 542, 546 (Bankr. The Third DCA affirmed. Similarly, the Florida Supreme Court ordered the division and sale of property when a portion of the property was not being used as homestead. 2000), citing. Under this law, an eligible veteran will receive a total exemption from property … From the Florida Constitution, a homestead must be “owned by a natural person” and is not to exceed 160 acres if located outside a municipality, or .5 acre if located within a municipality (Art X, section 4(a), Fla. M.D. In recent articles discussing high-profile corporate malfeasance and accounting scandals, the use of Florida’s unlimited homestead exemption to avoid creditors’ claims has been noted with concern. S.D. S.D. Note, however, that when the debtor owns the land upon which a mobile home is located, §222.05 is not applicable, and both the land and mobile home qualify as homestead.22, Decisions are in conflict as to whether motorboats can qualify for homestead protection. For over 140 years, the Florida Constitution has protected homestead property from forced sale except in certainspecified circumstances. 17 In re Russell, 60 B.R. . [a]ny person owning and occupying any dwelling house, including a mobile home used as a residence, or modular home, on land not his or her own which he or she may lawfully possess, by lease or otherwise, and claiming such house, mobile home, or modular home as his or her homestead, shall be entitled to the exemption of such house, mobile home, or modular home from levy and sale as aforesaid. Throughout, however, remember the discussion of Part I to the effect that the land’s character as “homestead” terminates with the decedent’s death, and it is merely the residual effects of that legal status (limited proscription on devise and potential exemption from creditors’ claims) that presently concern us. Co. v. Wilcox, 13 So. 7 Several Florida bankruptcy courts found that when the homestead property is not divisible, the trustee could sell the property and the court would apportion the proceeds. A) A “devise” is a disposition of real (or personal) property by will. . This means that the property cannot be forced to be sold in order to pay creditors of the probate estate. in order to satisfy the requirements of the exemption the funds must not be commingled with other monies of the vendor but must be kept separate and apart and held for the sole purpose of acquiring another home. There, the debtor, who owned a 1.3 acre oceanfront home in Palm Beach, argued his home should not be sold to pay creditors. As such, Part I of this article will focus on the exemption provided by the Florida Constitution in Art. If it is constitutional (exempt) homestead, the rule requires it be reported as such on the inventory. In Burdick, however, once again, the decedent was survived by a spouse and under those circumstances, the stated language is eminently correct. THE HOMESTEAD EXEMPTION. Authority: Public Health Trust of Dade County v. Lopez, 531 So. §733.608 (General power of the personal representative) — immediately following, provides: “All real and personal property of the decedent, except the homestead,. He is chancellor of the Academy of Probate and Trust Litigation Attorneys and the author of The Florida Bar Probate System; Ch. The decedent is not survived by a spouse or a minor child and the property is devised to a third party who is not one of the heirs of the decedent. 2d 386 (Fla. 3d DCA 1981), a vacant lot owned by the debtor and adjoining his homestead was found not to be part of the debtor’s homestead residence. 20 In re Dean, 177 B.R. (part 2) by "Florida Bar Journal"; Law Bankruptcy law Interpretation and construction Debtor and creditor Laws, regulations and rules Homestead law Homestead laws Fla. 1996), the court noted the following do not necessarily constitute abandonment: 1) mere absence from the homestead for financial reasons; 2) posting a “for sale” or offering the property for sale; or 3) failing to maintain the property for extended periods.32 Similarly, homestead status is not lost when a debtor leaves the home with no intention of returning but has a good faith intent to reinvest the proceeds of a future sale of the house in a new homestead.33 However, in Dep’t of Revenue ex rel. Fla. 1999). Fla. 1995). 2d 946 (Fla. 1988). 19 In re McAtee , 154 B.R. 862, 864 (Bankr. S.D. Fla. 1992); Raheb v. DiBattisto , 513 So. That would make it “subject to probate” but for the benefit of the creditors only. (As to statement 3) City National Bank of Florida v. Tescher, 557 So. Fla. 1998) (“under §522(b), the lack of a domicile in any state within the 180-day period immediately preceding the filing of the petition is fatal to any right of exemption under the laws of the state); , 153 B.R. The first $25,000 applies to all property … Fla. 1994). See also In re Nofsinger, 221 B.R. , 230 B.R. 159, 160–62 (1993) for a discussion on activities which can help establish a new domicile such as, but not limited to, obtaining a drivers license and voters registration card, filing income tax returns and paying tax in the domicile of choice; , 773 So. 2000) (where the court analyzed the taxpayers Florida contacts to determine whether they should be considered permanent residents of Florida despite having received a residency-based property tax credit in New Hampshire). LEXIS 547, at *4 (Bankr. The second consideration is the limitation on devise of the decedent’s homestead real property under art. (A scholar of the law is one who ponders the answers to questions when others do not even recognize the questions.) 15 Bloomfield v. St. Petersburg Beach , 82 So. Fla. 1987). Vickers v. Pelsey, 779 So. This case repeats the Spitzer language but “explains” that language as to its limited application. The estate was insolvent and a creditor attempted to reach the property for satisfaction of its claim. 2d 193, 195 (Fla. 1967); In re Haning , 252 B.R. Filing for the Homestead Exemption can be done online. The homestead is in no wise an asset of the estate of a decedent.” (Appearing at page 772-773). The organic law regarding homestead appears in art. 11. The title company is covering all bases in typical dirt lawyer style, and that is what they should be doing. Homeowners may claim up to a $50,000 exemption on their primary residence. In Price, how could the PR sell the house in order to make the proceeds available to the creditors? There is general agreement for the first 2 yeses. 2d 879 (Fla. 4th D.C.A. © 2021 The Florida Bar. §733.607 and §733.608 are to be read literally (the PR has no possessory right to the decedent’s homestead property), the Tkscher case, where the Second DCA affirmed entry of an order of the probate court finding a property to have been the homestead of the decedent and then confirming the probate court’s order authorizing its sale, reached the wrong result. these two sections be reconciled to the conclusion stated above (a “yes” answer to question 3 in Scenario 4)? at 1021. 28 Semple v. Semple , 82 Fla. 138 (Fla. 1921), quoting Solary v. Hewlett , 18 Fla. 756 (Fla. 1882) (“Under our statute there is an unbroken series of decisions, that occupancy, the use of the house by the family as a homestead, are essential requirements to impress the property with the character of a homestead. Authority: art. If the court finds that the owner of an otherwise qualified homestead has formed the requisite intent to obtain a homestead in Florida, the results can be quite advantageous for debtors who are new Florida residents if another potential obstacle is overcome. The Drucker opinion stated, “A bare lot unoccupied cannot be a homestead. If you missed it, you should read that article before reading this one. . In the real world, differing facts can produce dramatically different results, and debtors and their advisors must be sensitive to the nuances of the exemptions. As noted above, Art. 1) The property may be devised but only to the spouse. American Bar Association. The reference is nearly the same in each. She was survived by her son; however, since the son is an adult, his survival is irrelevant for purposes of determining whether the decedent’s homestead can be devised, since only a minor child would proscribe the devise. The Save Our Homes Amendment of the Florida Constitution, prevents the assessed value of the homesteaded property from increasing more than 3% per year or, … Florida courts have struggled with the burden of proof and deference due to property owners in homestead cases. It might also be appropriate to add clarifying language to the statutory definition of “devise.”. 2001). Your trust real estate division is correct to be concerned regarding administering a personal residence in an estate because the state of the law is very confused at the present time. Consequently, it may be advisable for individuals concerned about retaining protection for all of their homestead real estate to either purchase a residence outside a municipality on 160 acres or less or to purchase a residence within a municipality located on no more than one-half acre. As noted by the Florida Supreme Court, for over 150 years, the purpose of the homestead exemption has been to prevent absolute pauperism by protecting people of limited means from the consequences of “ill-advised promises,” which they make due to their own poor judgment or due to inducement by others. Also, the real property attorneys (dirt lawyers) and the title companies are even more confused. In addition, Part II will discuss planning to take advantage of homestead and conflicts that can arise in that context between professional advisors who may have different views. The legal background required to arrive at these conclusions is somewhat complex. '” (Appearing at page 1351, citing Spitzer ). 2d 704 (Fla. 2d D.C.A. The facts of Spitzer, however, are distinguishable in that the decedent was survived by his spouse. 3 Murray Chass, Kuhn’s Descent from Commissioner to Legal Outcast , The New York Times, May 12, 1991, §8, p. 3, col. 1. 2d 284, 290 (Fla. 3d D.C.A. Thank you for visiting the Sarasota County, FL. 1997) (“change of residence is accomplished and becomes effective when there is a good faith intention to establish it, coupled with the actual physical move to a new residence, as evidenced by positive overt acts”). Is the “yes, yes, yes” trilogy of affirmance in Scenario 4 so certain? M.D. §732.4015; Cavanaugh v. Cavanaugh, 542 So. 222. The court in Bosonetto reasoned the homestead exemption from forced sale can only be claimed for property owned by a natural person. Part I of this article, “Understanding the Basics,” appeared in last month’s Florida Bar Journal. Although nowhere in the case law is this specifically addressed, the logical answer must be “yes.” The property in Scenario 4 must be subject to probate. As such, courts have held that motor coaches, travel trailers, and even motorboats could, under the proper factual circumstances, be found to have the requisite permanence to qualify for the homestead exemption. Thus, regardless of whether one’s castle is a traditional family home or a modest cottage, whether it is a rural farmhouse or a villa by the sea, whether it floats or sits on wheels, whether it is a condominium or a co-op, it should receive the same protection under Florida law.”21. This means that, should you have a recorded judgment against you, that judgment cannot attach to or become a lien on your homestead. This statute (F.S. Even assuming, arguendo, that the decedent’s homestead will stand only for the claims of creditors, then in a limited sense, the PR must also be entitled to possession and have the right to sell the property. ch. © 2021 The Florida Bar. Persons owning homes in these or other new municipalities on more than one-half acre (but on no more than 160 acres) before the date of the municipal incorporation will continue to benefit from the 160-acre limitation for as long as their homes continue as their homestead. In re Kuver , 70 B.R. This language suggests: a) that there is constitutional homestead (which is exempt from creditors), and b) “other” homestead, which is not. New homeowners may apply for homestead between January 1 … S.D. Fla. 2002)(citing 11 U.S.C. That interpretation makes no sense and it is not possible to glean more from the opinion. M.D. The format of the following portion of this article is as an opinion letter sent to a corporate fiduciary client which is the personal representative of the estate. An additional reduction of up to $25,000 in assessment applies if the home is worth at least $50,000; however, the second exemption only applies to non-school taxes. In Burdick v. Burdick, 399 So. VII, Section 6 of the Florida Constitution. 594 (Bankr. 16 See John K. Harris, Jr., Practitioner’s Notes: Essentials of Estate Planning for the Professional Athlete, 11 U. Miami Ent. As illustrated, the case law is somewhat inconsistent. 881 (Bankr. 11 In re Bermudez , 1992 Bankr. 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