Florida has one of the most expansive homestead exemptions in the country. The homestead exemption is designed to protect your primary home from creditors. However, placing your home in a trust, which some individuals might do as part of their estate plan, can affect the legal protections for your home under some circumstances.
Understanding the Homestead Exemption
Florida’s homestead exemption provides invaluable benefits for homeowners. First, the exemption reduces the taxable value of your home by up to $50,000, which results in significantly lower property taxes. Second, the homestead exemption offers critical legal protection for your home. Under Article X, Section 4 of the Florida Constitution, a creditor who has a judgment against you for the payment of money may not force you to sell your home to satisfy that judgment.
Furthermore, the Florida homestead exemption includes not only a single-family home but a condominium, a manufactured home, and a mobile home if you own it with the intent of making it your permanent residence. Within a municipality, the homestead exemption applies to lots up to one-half acre in size. Outside a municipality, the homestead exemption applies to up to 160 acres. However, the monetary value of the homestead exemption is unlimited.
A Fort Lauderdale asset protection lawyer at Kramer Green can explain how the homestead exemption and other asset protection vehicles work and answer your questions about your financial situation. Together, we will work to maximize the protection of your assets from creditors.
Putting Your Home in a Trust
A common estate-planning tool is to place your home in a trust, primarily to avoid probate. Probate is the legal process of settling your estate following your death, which involves a court overseeing the appointment of a personal representative or executor of your estate, determining your heirs, paying liabilities, and distributing assets.
Probate, however, can be expensive and take a lengthy time to complete. For example, Florida Statutes Section 733.617 sets the compensation for a personal representative in an estate at 3% up to the first million dollars. The larger the estate’s value, the higher the compensation the personal representative receives. You can avoid these costs – and the months it may take to complete the probate process – by placing your home in a trust. Additionally, while probate proceedings are a matter of public record, meaning anyone can access them, trusts are not, meaning your estate will remain private.
Retaining the Homestead Exemption When Your Property is in a Trust
You can retain the advantages of the homestead exemption for your property, but you must take special precautions to do so when placing your property in a trust. You must include specific language in the trust document and the deed to your home to keep your eligibility for the homestead exemption in place. For example, your trust must be a qualified revocable trust in that the person living in the home must be a beneficiary of the trust and have the right to use and occupy the property for life.
As a result of these requirements, individuals should consult an experienced Florida trust attorney to ensure that their trust document and deed meet the requirements under Florida law to retain the homestead exemption. This step is particularly important for new Florida residents who might already have a trust drafted in another state. If the trust doesn’t meet the requirements, individuals could lose out on the homestead exemption benefit under Florida law.
Allow Us to Help You Protect Your Most Valuable Assets
A Boca Raton asset protection attorney at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can assist with the best means for protecting your family and business assets. Call our office today at (954) 966-2112 or contact us online to set up a time to discuss your asset protection issues with our attorneys.