Before his death, Nat created a residence trust and conveyed his Florida apartment to it. The trust provided that, upon Nat’s death, the apartment transferred to Valerie for her life with a power of appointment in Valerie to exercise at her death to leave the remainder to her granddaughter. 

Any Florida probate attorney knows this cannot be done because Florida law restricts who may receive homestead property at death when there is a surviving spouse. The Florida Supreme Court has said:

“[W]here a testator dies leaving a surviving spouse and adult children, the property may not be devised by leaving less than a fee simple interest to the surviving spouse …. This exception is exclusive and prohibits the testator from devising less than a fee simple interest to his surviving spouse under the circumstances presented herein.”

In re Finch’s Estate, 383 So. 2d 755, 757 (Fla. 4th DCA 1980)

The appellate court in the Stirberg case reconfirmed this ruling by saying:

“Thus, any devise of homestead property that does not grant a fee simple interest to a surviving spouse fails, regardless of intent.”

Nat’s children claimed the trust provision violated the Florida Constitution’s homestead provisions, resulting in a void gift, so they filed a petition to determine homestead status of real property. 

In its opinion, the appellate court noted that homestead passes immediately on the date of death by saying:

“Homestead property rights vest immediately upon the death of a testator or settlor. See Aronson v. Aronson, 81 So. 3d 515, 519 (Fla. 3d DCA 2012) (“At the moment of Hillard’s death, his homestead property passed outside of probate.” (citations omitted)); § 736.1109(1), Fla. Stat. (2022) (“If a devise of homestead under a trust violates the limitations on the devise of homestead in s. 4(c), Art. X of the State Constitution, title shall pass as provided in s. 732.401 at the moment of death.”).”

What’s interesting about this case is that the trustee of the residence trust attempted to fix the void trust provision by filing a separate trust reformation action, which almost worked: the trial court ordered reformation of the trust. But, the children appealed, and the appellate court sent the case back to the trial court, saying: 

“Not even a retroactive action can validly cure a devise violating the homestead laws. See Gotshall v. Taylor, 196 So. 2d 479, 481 (Fla. 4th DCA 1967) (“If the requirements of the Constitution and the statutes are not complied with in alienating homestead real estate, the attempt is a nullity … and is void ab initio, and subsequent events will not breathe life into it[.]”). A trust reformation is such a retroactive action and therefore cannot cure a devise violating the homestead laws.

“The Residence Trust conveyed to Valerie a life estate in the apartment with a power to appoint the remainder. Appellants have alleged that this conveyance violates constitutional and statutory homestead law. If they are correct, the Apartment would have passed as provided by section 732.401(1), Florida Statutes (2022)—a life estate to Valerie and a remainder to Appellants as the Decedent’s descendants.”

The case isn’t over yet. Now it’s up to the trial court to hear the petition to determine homestead status of real property filed by the children. Any predictions on who wins?

-James W. Martin, St. Petersburg, Florida, Probate Estate Attorney, April 30, 2023

The word is out on Tampa Bay: sunny skies, white sandy beaches, water all around, and the world’s best airport; the arts, culture and music; state-wide cell phone coverage; high speed cable modem Internet access. What a great place for the High Tech to live!

What is not as well known is that Florida is a great place to preserve wealth. Now I’m not saying that the Great Depression is around the corner, but anyone who’s already made it big in the New Economy is well-advised to sock away a little money in a nest egg in Florida. All you need is Florida residency, and here is what you get to keep:

1 Florida Homestead: The home where you live, your wife lives, or your children live is your homestead. No one can take it from you no matter how much it’s worth. Even if you paid a million dollars for it. Or more.

Homestead is limited not by dollar amount but by quantity of land. If located within a city, the homestead can be up to half an acre — enough land for a really big house. If located outside a city, it can be up to 160 acres — enough land for a really, really big house and some cows, pigs and horses.

Caveat: If you mortgage your house, the lender can take your home through foreclosure if you default. If you fail to pay contractors who work on your home, they can foreclose, too. And the government can take your home if you fail to pay taxes, of course. But no other creditors can reach your Florida homestead.

Source: Florida Constitution Article X Section 4.2

2 Florida Wages. No one can take your salary and wages in Florida. Without limit. As long as you are head of a family who provides more than half the support for a child or other dependent. And the wages remain exempt from creditors while in your bank account for up to 6 months. Hint: You can live in Florida and telecommute anywhere in the world, and your wages are safe because you are a Florida resident. This includes salary, bonus, commission, the works.

Source: Florida Statutes Section 222.11. 3

3 Cash Value of Life Insurance and Annuities. No one can take the cash value of life insurance or annuities issued on your life, no matter how valuable. You can have a million dollar cash value life insurance policy or annuity, and a creditor cannot reach it. You must be both the owner of the policy or annuity, and it must be on your life. And, of course, you must be a citizen or resident of Florida. Hint: You don’t need to wait for cash value to build up through annual premiums. Your life insurance agent would be happy to sell you a policy or annuity that has just one up-front cash premium payment. It’s like putting money in the bank, except that it’s not government-insured and might not pay as much interest, but it’s your nest egg and it’s safe from creditors in case of the Big Crash.

Source: Florida Statutes Section 222.14.4

Those are the top three exemptions that Florida residents enjoy, and they are the kind needed to protect a nest egg from the unexpected. Other states are not so generous to their residents when it comes to keeping assets away from creditors. So, preserve your wealth and move to Florida where you can keep your nest egg in your big brick house and away from the Big Bad Wolf.

Notes: This article is not intended to be legal advice on a specific factual situation. Before relying on this article, obtain legal advice to update and apply the law to your specific facts.

A variation of this article was published May 2001 in the newsletter of the Florida Bar Entertainment, Arts & Sports Law Section.

1 For more information, go to www.jamesmartinpa.com or email him at jim@jamesmartinpa.com.

2 Florida Constitution Article X Section 4. Homestead; exemptions._(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:

(1) a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner’s consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family;

(2) personal property to the value of one thousand dollars.

(b) These exemptions shall inure to the surviving spouse or heirs of the owner.

(c) The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child. The owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift and, if married, may by deed transfer the title to an estate by the entirety with the spouse. If the owner or spouse is incompetent, the method of alienation or encumbrance shall be as provided by law.

3 Florida Statutes Section 222.11 Exemption of wages from garnishment._(1) As used in this section, the term:

(a) “Earnings” includes compensation paid or payable, in money of a sum certain, for personal services or labor whether denominated as wages, salary, commission, or bonus.

(b) “Disposable earnings” means that part of the earnings of any head of family remaining after the deduction from those earnings of any amounts required by law to be withheld.

(c) “Head of family” includes any natural person who is providing more than one-half of the support for a child or other dependent.

(2)(a) All of the disposable earnings of a head of family whose disposable earnings are less than or equal to $500 a week are exempt from attachment or garnishment.

(b) Disposable earnings of a head of a family, which are greater than $500 a week, may not be attached or garnished unless such person has agreed otherwise in writing. In no event shall the amount attached or garnished exceed the amount allowed under the Consumer Credit Protection Act, 15 U.S.C. s. 1673.

(c) Disposable earnings of a person other than a head of family may not be attached or garnished in excess of the amount allowed under the Consumer Credit Protection Act, 15 U.S.C. s. 1673.

(3) Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings. Commingling of earnings with other funds does not by itself defeat the ability of a head of family to trace earnings.

4 Florida Statutes Section 222.14. “Exemption of cash surrender value of life insurance policies and annuity contracts from legal process. The cash surrender values of life insurance policies issued upon the lives of citizens or residents of the state and the proceeds of annuity contracts issued to citizens or residents of the state, upon whatever form, shall not in any case be liable to attachment, garnishment or legal process in favor of any creditor of the person whose life is so insured or of any creditor of the person who is the beneficiary of such annuity contract, unless the insurance policy or annuity contract was effected for the benefit of such creditor.”

Florida residents benefit from statutory exemptions from creditor’s claims.

But, apparently, it’s not clear enough. A recent court decision held that a homestead held “as joint tenants with full rights of survivorship and not as tenants in common” passed to the joint owner and not as homestead property. In Marger v. De Rosa, 2011 WL 252942 (Fla. 2nd DCA 2011), a father who had two minor children purchased a home with his own mother. The deed said the son and his mother owned the home “as joint tenants with full rights of survivorship and not as tenants in common.” The father died. The court held that 100% of the home passed to his mother. No part of the home passed to his minor children.

The court’s reasoning is based on the way the law treats the form of ownership known as joint with survivorship. Upon the death of one of the joint owners, the title to the property passes automatically by operation of law to the surviving joint tenant. The court reasoned that the father’s interest in the home ended immediately on his death so there was nothing to leave to his minor children.

What’s interesting about this case is that 1) it is surprising to Florida probate lawyers and Florida real property lawyers because we have seen the courts expanding the protections of the Florida constitutional homestead over the last twenty years, 2) this case goes in the other direction and limits the protection, and 3) there is nothing new about the theories behind the case. While some interesting theories were presented by the minor children’s attorneys, the court chose not to go with them.

This case shows that long-standing legal theories have built-in potential to clash with each other when the right facts invoke them. In this case, it was a clash between a grandmother and her minor grandchildren over a home she owned with their deceased son/father. Hopefully, those set of facts won’t soon present themselves again.

When a Florida resident dies, the Florida Constitution protects the surviving spouse and minor children from becoming homeless by prohibiting the decedent from leaving the homestead to anyone else. It says “[t]he homestead shall not be subject to devise if the owner is survived by spouse or minor child.” That seems pretty clear. But, apparently, it’s not clear enough.

Florida law grants Florida homeowners several protections with regard to their homesteads. First is the homestead exemption on the annual real estate taxes. Second is the Save Our Homes Cap on the value that is subject to the annual taxes. Third is the exemption from forced sale of the homes by general creditors.

All of these protections require that homes be the homesteads of the owners. Homestead can be complicated to determine, but it comes down to being the place where you intend to permanently reside; i.e., your domicile. Various facts show your intent. What address is on your driver license, where your bills are sent, what address is on your tax return, where you physically live, etc.

If you rent the home out to someone else and no longer live there yourself, you have created evidence of abandonment of homestead even if you still own the home. This gives the state a reason to take away the homestead tax exemption and the Save Our Homes Cap, resulting in substantially higher annual real estate taxes. It also gives general creditors a reason to claim the right to enforce judgments against the home since it is no longer protected as homestead.

So, before renting out Florida homestead, consider whether doing so will result in possible loss of the homestead exemption. (Of course, the same consideration applies to moving out of the Florida homestead without renting it.)