Florida Homestead and My Estate Plan
The Florida homestead law is an important consideration when creating your Naples estate plan. It offers some of the strongest protections from creditors and bankruptcy in the country. If you are a Naples resident and property owner, it is critical to understand Florida homestead and how it can affect your estate plan.
What are the Qualification Requirements for a Florida Homestead Property?
To qualify for the protections under the Florida homestead law, the home must be owned by a Florida resident or a revocable trust. The owner cannot be a corporation or any other type of legal entity. If you spend part of your time at your Florida residence and part of your time out-of-state, an estate planning attorney can help you determine whether you would meet the residency requirement. The state will look at various factors, including if you spend most of your time in Florida.
The property must be used as a primary residence, and an individual cannot have more than one homestead property in Florida.
Additionally, the Florida homestead law only applies to property within certain size limitations. The property must be no greater than one-half acre if it is located in a municipality and no greater than 160 acres if located outside a municipality.
What are the Benefits of the Florida Homestead Law?
The primary benefit of the Florida homestead law is the protection it offers from creditors and during bankruptcy. In Florida, a creditor cannot force the sale of homestead property to satisfy a judgment against the property owner. However, this protection does not extend to the IRS or creditors associated with the homestead property. For example, your mortgage company or the contractors that worked on your roof could still place a lien on your home. In general, a homestead property bought to avoid creditors will still be protected in Naples. However, if you used fraudulently obtained funds to buy the home, it may lose protection.
During a bankruptcy proceeding, a trustee cannot liquidate a protected Florida homestead to satisfy a creditor. However, the complete homestead protection only applies during bankruptcy if you have lived in Florida for at least 40 months. If you have lived in Florida for less than 40 months, the homestead exemption is capped at $160,375.
Besides limited exceptions, like the 40 months residency requirement in bankruptcy, Florida places no cap on homestead exemptions. It offers 100% protection. This creates a powerful shield, as the home is the most valuable asset for most Americans. Asset protection continues when the owner’s family inherits the property.
Who Inherits a Florida Homestead Property?
A homestead property is not included in probate in Naples. Instead, the personal representative of the estate files a Petition for Determination of Homestead, asking the probate court to find that the home qualifies as homestead property. The property is then transferred to the appropriate heirs who also receive the homestead protections.
Florida law, not what you write in your will or revocable trust, governs what happens to homestead property after your death. It places significant restrictions on who can inherit a homestead property. Who inherits your property depends primarily on whether you have a surviving spouse and minor children.
• Surviving spouse and minor children. If you have a surviving spouse and minor children, your spouse is granted a life estate, and your children receive shares of the remainder interest as tenants in common. Your spouse has the option of receiving a 50% interest as tenants in common with the children instead of a life estate.
• Surviving spouse and no minor children. If you are married with no minor children when you pass away, your homestead property is devised for your surviving spouse.
• No surviving spouse and no minor children. If there is no surviving spouse or minor children, the property passes like any other asset under Florida law.
The restrictions on who you can leave the property to are complicated and should be discussed with an attorney. If the restrictions do not make sense for your estate, your attorney can discuss alternative options.
Call A Naples Homestead Attorney
If you have questions about Florida homestead and estate planning, you should contact Nici Law Firm. James R. Nici is an experienced Naples attorney with over 25 years of experience. He is well versed in these issues and can create an estate plan that fits your needs. Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.