2004 01 Homestead Pitfalls Traps Pratt Nelson 932VS
User Manual: 932VS
Open the PDF directly: View PDF 
.
Page Count: 19
| Download | |
| Open PDF In Browser | View PDF |
LAW OFFICES OF
NELSON & NELSON, P.A.
Barry A. Nelson
Fellow, American College of
Trust and Estate Counsel
Master of Laws in Taxation
Board Certified Taxation &
Wills, Trusts & Estates
Judith S. Nelson
Former Judge of Compensation
Claims
2775 Sunny Isles Boulevard, Suite 118
North Miami Beach, Florida 33160
ASSOCIATES
Jennifer D. Facarazzo
info@estatetaxlawyers.com
www.estatetaxlawyers.com
Master of Laws in Taxation
Telephone: 305.932.2000
TeleFax: 305.932.6585
OF COUNSEL
••••••
Jennifer E. Okcular
Master of Laws in Taxation
Richard B. Comiter
Master of Laws in Taxation
Board Certified Taxation
Mirlene E. Dubreuze
Office Manager
FLORIDA’S HOMESTEAD LAWS:
PITFALLS AND TRAPS FOR THE NON-FLORIDA PRACTITIONER
By David Pratt and Barry A. Nelson*
Florida continues to be one of the most popular states for clients to own a second residence and,
ultimately, to permanently reside. Indeed, Florida’s population increased by approximately 339,000
people between July 1, 2001 and July 1, 2002.1 While Florida’s homestead laws would not apply to
an individual who is not a Florida resident, once such individual becomes a Florida resident, such
laws would apply. Typically, an individual who purchases a vacation home in Florida will take title
to the home in a revocable trust or an entity in order to avoid probate of the property upon the
individual’s death. However, when the individual decides to become a Florida resident, he or she
will usually want to treat the home as his or her homestead in order to avail himself or herself of
Florida’s favorable laws with respect to homestead property.
The purpose of this article is to discuss some of the nuances that apply to Florida’s homestead laws
so that the non-Florida practitioner who represents a client who purchases a home in Florida can
address these issues which will probably apply when the individual decides to become a Florida
resident and treats such home as his or her homestead. There are three distinct areas to address: (1)
homestead for descent and distribution purposes;2 (2) homestead for property tax purposes;3 and (3)
homestead for asset protection purposes.4
1
According to the U.S. Census Bureau, Florida’s population between July 1, 2001 and July 1, 2002
increased by approximately 339,819 people.
2
For an in depth analysis of the descent and distribution laws pertaining to homestead, see Rohan Kelley,
Homestead Made Easy, 65 Fla. Bar J. 3 (March 1991); Rohan Kelley, Homestead Made Easy, Part II, 65 Fla. Bar J.
4 (April 1991).
3
For an in depth discussion regarding the “Save the Homes” cap which pertains to Florida’s property tax,
see Richard Franklin’s outline entitled “Protecting & Preserving the Save Our Homes Cap,” which was presented at
the Florida Bar Real Property, Probate and Trust Law Section Seminar on May 23, 2003 in St. Petersburg, Florida.
4
For an in depth discussion regarding asset protection issues of Homestead, see Barry A. Nelson and Kevin
E. Packman, Florida’s Unlimited Homestead Exemption Does Have Some Limits, Part I, 77 Fla. Bar J. 1 (January
2003); Barry A. Nelson and Kevin E. Packman, Florida’s Unlimited Homestead Exemption Does Have Some Limits,
Part II, 77 Fla. Bar J. 2 (February 2003).
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 2
In order for the home to qualify as an individual’s homestead, such individual must take affirmative
steps to qualify the home as such. Specifically, the individual must have legal or beneficial title in
equity to real property on January 1st, reside on such property and in good faith make the same his
or her permanent residence, or the permanent residence of another or others legally or naturally
dependent upon such person.5 In order to qualify the home as the homestead property, an individual
must apply for such exemption, in person, at the property appraiser’s office, between January 1st and
March 1st of the year for which the exemption is sought.
In addition to qualifying the home as homestead, the individual who wants to perfect his or her
Florida domicile should take affirmative steps to become a Florida domiciliary, (i.e., obtaining a
Florida driver’s license, registering to vote in Florida, etc.6), including the filing of a “declaration of
domicile” in the county in which he or she resides.7 A sample of such a declaration is provided at
the end of this article.
During a homestead owner’s lifetime, he or she may alienate the homestead by mortgage, sale or
gift, but only if the homestead owner’s spouse joins the alienation. In addition, if married, the
homestead owner may by deed transfer the title to an estate by the entirety with his or her spouse.8
DESCENT AND DISTRIBUTION
The Florida Constitution and Florida Statutes address how a homestead may be distributed upon the
owner’s death and the consequences of an invalid devise of the homestead. Section 4(c) of Article X
of the Florida Constitution states, in relevant part, that 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.9
Section 732.401(1) of the Florida Statutes further provides that “[i]f not devised as permitted by law
and the Florida Constitution, the homestead shall descend in the same manner as other intestate
property; but if the decedent is survived by a spouse and lineal descendants, the surviving spouse
shall take a life estate in the homestead, with a vested remainder to the lineal descendants in being at
the time of the decedent’s death.”10 Moreover, “the homestead shall not be subject to devise if the
owner is survived by a spouse or a minor child, except that the homestead may be devised to the
owner’s spouse if there is no minor child.”11 These rules also apply to a homestead owned by a
5
See F.S. 196.031(1).
6
A full discussion of the steps to take to become a Florida resident is beyond the scope of this article.
7
See F.S. § 222.17.
8
Section 4(c) of Article X of the Florida Constitution.
9
Id.
10
F.S § 732.401.
11
F.S. § 732.4015(1).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 3
revocable trust and the term “devise” includes a “disposition by trust of that portion of the trust
estate which, if titled in the name of the settlor of the trust would be the settlor’s homestead.”12
While these laws regarding homestead may appear to be straightforward, in practice, it is not
uncommon for the homestead to be improperly devised. Furthermore, when second marriages and
stepchildren enter the equation, or planning is undertaken to fund a credit shelter or marital trust
with all or a partial interest in the homestead upon the first dying spouse’s demise, the results may be
in direct conflict with the testator’s intentions.
As set forth in the Florida Constitution and Statutes, if an individual is not survived by a spouse or a
minor child, the individual may devise the homestead in any manner he or she wishes. However, if
the individual has no minor children, but does have a spouse, then the only permitted devisee of the
homestead is the spouse. For these purposes, a devise would include a specific devise of the
homestead or the homestead’s passing as part of the residue of an estate or revocable trust.
If the homestead is improperly devised (or not devised at all) and the decedent is survived by a
spouse and lineal descendants, the spouse receives a life estate in the property and the descendants
receive the remainder interest. For these purposes, “stepdescendants” would not be included within
the definition of descendants. If the decedent is not survived by a spouse or lineal descendants, then
the property passes pursuant to the laws of intestacy (assuming the decedent died intestate).13
When planning to use the estate tax exemption of the first spouse to die, the practitioner will usually
recommend that each spouse have a sufficient amount of assets in his and her names (or revocable
trusts) in order to fund a credit shelter or QTIP trust (and making a partial QTIP election or no
election at all) upon the death of the first dying spouse. Accordingly, in dividing the couple’s assets,
it is not uncommon to transfer title to the homestead to one of the spouses or to both of the spouses
as tenants in common.14 While such a transfer may be prudent from a Federal transfer tax
perspective, it will be necessary for the spouse to waive his or her homestead rights with respect to
descent and distribution during his or her life. Otherwise, upon the death of the spouse who owned
the home (or an undivided partial interest therein), assuming he or she was the first dying spouse, the
devise would be invalid. In such a case, the surviving spouse would receive a life estate and the
deceased spouse’s descendants would receive a remainder interest in the property. While it may be
possible to make a partial QTIP election (or no election at all) for the surviving spouse’s life estate
in order to utilize the estate tax exemption of the first dying spouse, the home will be distributed to
such spouse’s descendants, outright and free of trust, upon the surviving spouse’s demise. Such a
disposition may be different than the dispositive provisions that would have otherwise applied if the
home would have been distributed to the credit shelter or marital trust, as contemplated. For
example, step-descendants or others may have been the remainder beneficiaries of such a trust.
As mentioned above, a homestead waiver will need to be executed if the individual wants the home
12
F.S. § 732.4015(2).
13
See F.S. § 732.401.
14
It should be noted that the transfer of the home to one of the spouses could trigger the imposition of
Florida documentary stamp tax if the real estate is encumbered. In general, the consideration is the balance of the
mortgage at the time of the transfer and the tax is imposed on one-half of the balance at a rate of $7 per $1,000. F.S.
§ 201.02(1).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 4
to be distributed pursuant to the terms of the credit shelter or marital trust. A sample homestead
waiver is provided at the end of this article.
Regarding the waiver, such a document could be construed as a post-nuptial agreement between the
spouses. Under Florida law, the rights of a surviving spouse to homestead (or elective share,
intestate share, pretermitted share, exempt property, family allowance and preference in appointment
as personal representative of an intestate estate) may be waived, wholly or partly, before or after the
marriage, by written contract, agreement or waiver, signed by the waiving party in the presence of
two subscribing witnesses.15 Furthermore, in most well drafted post-nuptial agreements, both
spouses are represented by independent counsel. From a practical perspective, when clients are
executing homestead waivers, however, they are not being represented by independent counsel and
are not including full disclosure of their assets. It is uncertain whether the failure to include full
disclosure of assets and separate legal representation would invalidate the homestead waiver.
PROPERTY TAX ISSUES
A Florida resident who owns homestead property is entitled to two tax breaks with respect to the
assessment of real property taxes on his or her homestead. The first break is nominal, but the second
one can be significant. Again, in order to benefit from these rules, the individual must take the
affirmative steps necessary to qualify the home as the homestead, as discussed above.
The first benefit relates to the $25,000 reduction on the assessed valuation of the homestead
property. All real property owned in Florida is subject to real property tax based on the millage rate
applicable to the county in which the real property is located multiplied by the assessed valuation.16
The assessed valuation is reduced by $25,000 if the property is homestead property.17 Such
reduction generally translates into a tax savings of a few hundred dollars.
The second benefit relates to the limitation imposed on the annual valuation of homestead property
for property tax purposes and is commonly known as the “Save the Homes” cap. Such limitation
provides that the annual increase in an assessment of real property which qualifies as homestead
property may not exceed the lesser of three percent (3%) or the percent change in the Consumer
Price Index from the prior year.18
In some areas in Florida, the differences between the assessed valuations of neighboring properties
can be staggering. For example, consider the individual who has resided on his beachfront property
for the past twenty-five years and compare him to his new neighbor who just purchased a similar
home. The practitioner must be cognizant of the “Save The Homes” cap in order to ensure that it is
maintained for as long as possible.
In general, a transfer of the real property will trigger a revaluation of the homestead for real property
tax purposes. There are a few exceptions to this rule; the most relevant exceptions, for purposes of
15
F.S. § 732.702.
16
See Section 2 of Article VII of the Florida Constitution.
17
See Section 6 of Article VII of the Florida Constitution; F.S. 196.031.
18
See Section 4(c) of Article VII of the Florida Constitution; F.S. 193.155.
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 5
this article, are for transfers (1) between a husband and wife; (2) which occur by operation of the
homestead laws, as discussed above (i.e., life estate in spouse and vested remainder in lineal
descendants); and (3) upon death to a dependent person.
There are two common situations in which the “Save the Homes” cap should be addressed. First,
when a homestead passes to a trust of which the surviving spouse is a beneficiary (i.e., a credit
shelter or QTIP trust), the “Save The Homes” cap should apply, provided that the surviving spouse
has an “equitable interest for life” in the homestead property. Accordingly, language such as the
following should be included in any such trust:
Notwithstanding anything to the contrary contained herein, if any portion of the real
property which qualified as my homestead during my life is an asset of any trust
established upon my death of which my spouse is a beneficiary, my spouse shall
have the exclusive and continuous present right to full use, occupancy and
possession of such homestead residence for life. It is my intention that my spouse’s
interest in such property shall constitute a “beneficial interest for life” and equitable
title to real estate” as contemplated by Florida Statutes Section 196.041(2) and this
instrument shall be construed accordingly.
Second, when a home is transferred to a qualified personal residence trust,19 the home should
maintain its homestead status during the term of the trust.20 However, the limitation may no longer
apply at the expiration of the term (i.e., if the home is distributed to the children at that time). Thus,
practitioners should alert their clients to the potential loss of the limitation prior to their execution of
the qualified personal residence trust.
It is important to note that the transfer of the home to a revocable trust should not affect the
homestead status for property tax purposes. However, when a home is conveyed to a revocable
trust, the property owner should advise the property tax appraiser’s office that the property owner
has the necessary beneficial interest in the trust in order to maintain homestead status. Typically, the
property tax appraiser’s office will send a “certificate of trust” to the owner after a deed is recorded
which conveys a home to the revocable trust. The owner should complete such certificate and return
it to the property tax appraiser’s office promptly. In addition, language should be included in a
revocable trust (and a qualified personal residence trust) to ensure that the home will maintain its
homestead status. An example of such language is as follows:
Grantor reserves the right to reside upon any real property placed in this Trust as
Grantor's permanent residence during Grantor's life, it being the intent of this
provision to retain for Grantor the requisite beneficial interest and possessory right in
and to such real property to comply with Section 196.041 of the Florida Statutes,
such that said beneficial interest and possessory right constitute, in all respects,
"equitable title to real estate" as that term is used in Section 6, Article VII of the
Constitution of the State of Florida.
19
See IRC § 2702 (2003).
20
See Robbins v. Wellbaum, 664 So.2d 1(Fla. 3d CDA 1995). However, in order to ensure that the
homestead exemption will be preserved during the term of the trust, practitioners should request a written opinion
from the local property tax appraiser’s office where the real property is located.
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 6
ASSET PROTECTION
Many Floridians enjoy the security of knowing that Florida's liberal "unlimited" homestead
exemption protects their family residence from creditors. However, there are numerous limitations
and traps to avoid to be certain to obtain protection from the homestead exemption. Accordingly,
there are serious dangers for those who believe that all it takes to gain the protection of the
exemption is to move to Florida and purchase or construct an expensive home.
National newspapers have generated a misunderstanding amongst their readers regarding the ease
with which the homestead exemption may be obtained by stating that those involved in litigation or
those who have procured funds fraudulently can simply build an expensive home that would gain
homestead protection. For example, on July 12, 2002 The Washington Post21 reported that Scott D.
Sullivan, former CFO of WorldCom, is building a $15 million Boca Raton "mansion" that may
qualify for homestead exemption status. Unfortunately these articles do not explain the limitations
on Florida's homestead exemption. Based upon the number of recent cases interpreting Florida's
homestead exemption, it is an issue of practical application.
FLORIDA CONSTITUTION
The starting point for understanding Florida's homestead exemption for asset protection is Article X,
Section 4(a) of the Florida Constitution, which states, in relevant part:
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. . . .
Thus, there are three significant requirements that the courts must consider in order to determine
whether a debtor's homestead qualifies for Florida's constitutional exemption from forced sale:
(1) acreage limitations; (2) residency requirements; and (3) ownership requirements. Of course, to be
eligible for protection from creditors, the property must be located in the State of Florida.22 An
additional factor is whether the funds used to obtain the homestead were fraudulently obtained.23
THE POLICY BEHIND THE HOMESTEAD EXEMPTION
Because the purpose of the unlimited exemption is to protect families from misfortune, the burden is
21
Jackie Spinner, The Washington Post, "Homes Remain Rogue Executives' Castles Under Loophole."
22
In re Sanders, 72 B.R. 124, 125 (Bankr. M.D.Fla. 1987).
23
In re Financial Federated Title and Trust, Inc., 2003 U.S. App. LEXIS 20229 (11th Cir. 2003), aff'g, 273
B.R. 706 (Bankr. S.D.Fla. 2001).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 7
on the creditor to argue against homestead protection.24 In Public Health Trust v. Lopez,25 the court
stated that the purpose of the homestead law is to promote the stability and welfare of the state by
securing to the householder a home, so that the homeowner may live beyond the reach of financial
misfortune. Similarly, in Orange Brevard Plumbing & Heating Co. v. La Croix,26 the court said that
the purpose of the homestead law "is to benefit the debtor by securing his or her homestead beyond
all liability from forced sale under process of any court." Such cases reflect the liberalness in which
courts will interpret the homestead exemption so that families will have shelter and not be reduced to
absolute destitution.
ACREAGE LIMITATIONS ON HOMESTEAD
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. As stated above, Florida's constitutional
protection is generally limited to the extent of one-half acre if the residence is located within a
municipality. Until 1997, when the United States Supreme Court denied Certiori in In re
Englander,27 thereby letting stand the decision of the 11th Circuit Court of Appeals,28 the extent to
which homestead protection was available for a residence on more than one-half acre within a
municipality was uncertain.29 The debtor in Englander owned a home on approximately one acre
within a municipality, and the property could not be legally subdivided due to local zoning
regulations. The debtor claimed a homestead exemption for a portion of the property that surrounded
the non-exempt portion, eliminating any reasonable access to the non-exempt portion and rendering
it valueless. The court, in reaching its conclusion that the homestead designation sought for a portion
of the property was improper, stated that the debtor's "attempt at homestead exemption
'gerrymandering' was clearly in bad faith.30 The Bankruptcy Court granted the debtor an exemption
in a portion of the proceeds to be derived from the sale of the property equal to the value of one half
24
Lewton v. Hower, 18 Fla. 872, 882 (Fla. 1882); Graham v. Azar, 204 So. 2d 193, 195 (Fla. 1967); In re
Haning, 252 B.R. 799, 806 (Bankr. M.D. Fla. 2000), citing In re Ehnle, 124 B.R. 361, 363 (Bankr. M.D. Fla. 1991)
("placing the burden on objecting party to establish with preponderance of evidence that debtors are not entitled to
claimed exemption").
25
531 So. 2d 946, 948 (Fla. 1988), aff’g. 509 So. 2d 1286 (Fla. 4th D.C.A. 1987).
26
137 So. 2d 201, 204 (Fla. 1962).
27
520 U.S. 1186.
28
Englander v. Mills (In re Englander), 95 F.3d 1028 (11th Cir. 1996). See also In re Nofsinger, 221 B.R.
1018 (Bankr. S.D. Fla. 1998), following Englander, which provided the parties thirty (30) days from the Order to
submit an agreed order as to the value of the property that was not protected by homestead and the manner in which
said amount was to be paid to the Bankruptcy Trustee for inclusion in the debtor's bankruptcy estate. Otherwise, the
Trustee was authorized to sell the homestead (as set forth in Englander) and "the Court will apportion the proceeds
accordingly." Id. at 1021.
29
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. In re Wierschem, 152 B.R. 345, 347 (Bankr.
M.D.Fla. 1993); In re Baxt, 188 B.R. 322, 323-324 (Bankr. S.D.Fla. 1995). Reflecting a contrary view, a court found
that when the homestead was divisible, but the zoning laws prevented a sale, that the entire property would be
exempt homestead. In re Kuver, 70 B.R. 192 (Bankr. S.D.Fla. 1986). Similarly, the Florida Supreme Court ordered
the division and sale of property when a portion of the property was not being used as homestead. Smith v.
Guckenheimer, 42 Fla. 1, 19 (Fla. 1900).
30
In re Englander, 156 B.R. 862, 864 (Bankr. M.D. Fla. 1992).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 8
acre.31 The court reasoned that a sale and apportionment of the sales proceeds is an equitable
solution that allows for the appropriate recognition of the debtor's homestead and affords creditors
some satisfaction of their claims.
When given the opportunity, in In re Kellogg,32 the 11th Circuit Court of Appeals reinforced
Englander. In Kellogg, the debtor, who owned a 1.3 acre oceanfront home in Palm Beach, argued his
home should not be sold to pay creditors. Instead, the debtor reasoned, he should be able to remain
in his residence and surrounding property to the extent of one-half acre with the remaining acreage
assigned to creditors. Relying on Englander, the court ordered the sale of the homestead property.
The proceeds were allocated with the portion of the proceeds which exceeded those attributable to
one-half acre being made available to creditors.
The Englander approach was also followed in In re Quraeshi,33 where the debtor claimed the
homestead exemption on his residence which was situated on 2.69 acres located within a
municipality. The Trustee objected to the debtor's claim of exemption when the debtor sought
permission to sell the homestead. The Trustee argued that the Florida Constitution, Art. X, Section 4
states that a homestead cannot exceed one-half acre in a municipality. The parties agreed that the
residence was indivisible. The court sustained the Trustee's objection and found that the debtor's
exempt one-half acre would equate to 19% of the total acreage and, thus, the debtor was entitled to
19% of the proceeds. The home was sold for $760,000 and, after satisfying the mortgages (first and
second) and closing costs, $216,000 remained. The debtor filed an appeal challenging the method in
which the bankruptcy court calculated the 19%. The debtor alleged he was entitled to 19% of the
gross sales price of $760,000, rather than 19% of the net sale price of $216,000 (i.e., the gross sales
price less mortgages, tax liens and the like). Quraeshi was the first reported Florida case addressing
how assets should be apportioned when the acreage exceeds one-half an acre within a municipality
and the property cannot be partitioned. In order for the property to be partitioned, there would have
to be an exempt one-half acre (on which the debtor would presumably continue to reside) and a
remaining non-exempt portion (for which there would be a valid use).
The Quraeshi Court recognized that there was no case law in Florida or in the Eleventh Circuit on
point; thus, it would have to examine the plain language of the Florida Constitution. The court
found that the homestead provision "specifically excludes a small number of debts - mortgages, real
property taxes, repairs to improve the land - that are connected to the real property . . . . Based on
the language of the homestead provision, it would seem that a debtor's homestead exemption would
extend to a pro rata portion of the net proceeds of a sale of a debtor's property, based on his acreage
share of the property sold, rather than on a pro rata portion of the gross sales price."34 Consequently,
the Court determined that the gross sales proceeds had to be used to satisfy the excluded liens before
any portion of the proceeds could be considered the debtor's homestead.
As shown by the Englander, Kellogg and Quraeshi decisions, courts can order the sale of a
homestead when such property (i) exceeds the constitutional size limitations set forth in the Florida
31
Id. at 870.
32
197 F. 3d 1116 (1999).
33
34
289 B.R. 240 (Bankr. S.D. Fla. 2002).
Id. at 244.
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 9
constitution, and (ii) the property cannot be practically or legally subdivided. 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 of an acre. Alternatively, a wouldbe debtor could purchase a condominium, which could be fully protected by the exemption.
As noted above, Article X, Section 4(a)(1) of Florida's Constitution provides the acreage limitation
may not be reduced without the owner's consent by reason of subsequent inclusion in a municipality.
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 onehalf acre within an unincorporated area that later becomes a municipality. Many Florida
municipalities have incorporated since 1990. Persons owning homes in new municipalities on more
than one-half of an 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. Accordingly, certain homes within new municipalities are effectively
"grandfathered" for homestead protection while those purchased after becoming a municipality are
subject to the usual one-half acre limitation. This distinction causes a potential trap for those
advisors who simply apply the one-half acre rule without questioning the date of incorporation of a
municipality and the date that home was purchased. Furthermore, the rules set malpractice traps for
advisors unfamiliar with the law who may advise a "grandfathered" homeowner to convey the
homestead to a limited partnership because once the conveyance is made, the protection will be lost.
As discussed below, it is not clear whether a homestead owned by a revocable trust maintains
homestead protection or whether such a conveyance could result in loss of the “grandfathered”
exempt status. Therefore, before a protected homestead is conveyed into any estate planning entity,
one needs to be assured that the conveyance will not result in a loss of asset protection benefits.
Accordingly, the safest approach, notwithstanding the estate tax or probate avoidance benefits of
other forms of ownership, such as revocable trusts or QPRTs, may be to leave title of a protected
homestead as is (i.e., in individual name).
RESIDENCE LIMITATIONS FOR HOMESTEAD
To obtain the benefits of the homestead exemption for asset protection the debtor must be a resident
in Florida. In order to be a resident of Florida, the debtor must have a residence in the state as well
as the actual intent to permanently reside in Florida.35
An alien debtor can only satisfy the permanent residency requirement if the debtor is granted a
permanent visa or "green card."36 The Bankruptcy Court, in In re Bermudez,37 and In re Cooke,38
reasoned "unless the debtor is issued such permanent status, the alien debtor cannot legally
35
Hillsborough Inv. Co. v. Wilcox, 13 So. 2d 448, 452 (Fla. 1943); In re Cooke, 412 So. 2d 340, 342 (Fla.
1982).
36
In re Bermudez, 1992 Bankr. LEXIS 547, at *4 (Bankr. S.D. Fla. 1992); Raheb v. DiBattisto, 513 So. 2d
717 (Fla. 3d D.C.A. 987).
37
1992 Bankr. LEXIS 547, at * 4 (Bankr. S.D. Fla. 1992), citing In re Gilman, 68 Bankr. 374, 375-376
(Bankr. S.D. Fla. 1986).
38
412 So. 2d 340, 342 (Fla. 1982).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 10
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,39 the Bankruptcy
Court held that a non-citizen of the United States, who had failed to maintain her U.S. visa status and
had lost the right to remain in the United States at the time she filed for bankruptcy, was not a
resident of Florida for purposes of the exemption from forced sale of homestead.
OWNERSHIP REQUIREMENTS FOR HOMESTEAD
Once debtors have established a Florida residence on the requisite acreage, in order to obtain
protection, they must also meet ownership requirements. The identity of the legal owner of the
homestead can have dramatic impact on the availability of the exemption. In Crews v. Bononetto (In
re Bosonetto),40 the Bankruptcy Court, in a controversial decision, held that a debtor could not claim
the homestead exemption from forced sale for a personal residence she owned not in her individual
capacity, but as trustee of the revocable trust into which she had conveyed the homestead. The court
reasoned that the homestead exemption from forced sale can only be claimed for property owned by
a natural person.41 Bosonetto was neither followed nor mentioned in Callava v. Feinberg,42 where
the court stated that an individual claiming homestead exemption need not hold fee simple title to
the property. In Callava, title to property was held in the name of a trustee. Notwithstanding the
debtor's victory in Callava, if homestead protection for asset protection purposes is an objective, the
most conservative approach until this issue has been more clearly resolved is to hold title in an
individual capacity or as tenants by the entirety for husband and wife, and not through a trust,
corporation, partnership, LLC, or other entity.
KINDS OF RESIDENCE QUALIFYING AS HOMESTEAD
The types of residence that have been found to qualify as homestead are countless. Moreover, the
interest in the underlying homestead can be fractional,43 a leasehold,44 or a share in a co-operative
apartment.45 In Southern Walls, Inc. v. Stilwell Corp., the court stated, "[a]lthough a castle to one
person may be a shanty to another, the law does not so discriminate. 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."46
Courts and legislation have extended the protection of homestead from forced sale to include many
locations beyond the typical home. Chapter 222 of the Florida Statutes is the legislature's
39
134 B.R. 979 (Bankr. M.D. Fla. 1991).
40
271 B.R. 403 (Bankr. M.D. Fla. 2001).
41
Id. at 406.
42
2003 Fla. App. LEXIS 15467 (Fla. 3d D.C.A. 2003).
43
Vandiver v. Vincent, 139 So. 2d 704 (Fla. 2d D.C.A. 1962).
44
In re McAtee, 154 B.R. 346, 349 (Bankr. N.D. Fla. 1993) (holding that a 99-year lease was an ownership
interest that satisfied the requirements of Florida’s homestead exemption to forced sale).
45
In re Dean, 177 B.R. 727 (Bankr. S.D. Fla. 1995).
46
S. Walls, Inc. v. Stilwell Corp., 810 So. 2d 566, 571 (Fla. 5th D.C.A. 2002).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 11
implementation of Florida's constitutional protection against the forced sale of homestead. Section
222.05 provides: “[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.”47
For an additional discussion on the types of properties that have qualified for homestead protections,
see Nelson and Packman, Florida’s Unlimited Homestead Exemption Does Have Some Limits - Part
1, 77 FLA. B.J. 60 (Jan. 2003).
OCCUPANCY IS GENERALLY A PREREQUISITE TO HOMESTEAD STATUS
Despite contrary statements in recent newspaper articles,48 a majority of Florida courts have ruled
that neither a home under construction nor a vacant lot is eligible for the homestead exemption from
forced sale. This issue appears to have been settled in the 1882 case of Drucker v. Rothstein,49 where
the court held that a parcel of land, never occupied as a dwelling place or home, and incapable of
such occupancy, is not a homestead under the Florida Constitution. The Drucker opinion stated "[a]
bare lot unoccupied cannot be a homestead. Lumber placed upon it for the purpose of building is not
such occupancy, even though there may be a contract made for building."50 Similarly, in In Re
Estate of Ritter,51 a vacant lot owned by the debtor and adjoining his homestead was found not to be
part of the debtor's homestead residence. The court, in In Re. Estate of Ritter, reasoned that "[the
lot] at no time had any structures or improvements built upon it which served the residence . . . and
was never jointly fenced in with the [residence]. It was merely a separate, empty lot which served, at
best, as an excess side yard to the aforementioned residence."52 For an additional discussion on the
types of properties that have qualified for homestead protections, see Nelson and Packman,
Florida’s Unlimited Homestead Exemption Does Have Some Limits - Part 1. 77 FLA. B.J. 60 (Jan.
2003).
LIMITATIONS ON FLORIDA'S HOMESTEAD EXEMPTION IMPOSED BY
FEDERAL TAX LAW
In some cases Federal tax law will pre-empt Florida's homestead exemption for asset protection
purposes. In 1998, the Bankruptcy Court held that a Federal tax lien was held to be enforceable
against homestead property.53 The court found that "the homestead exemption does not erect a
47
See F.S. § 222.05.
48
Jon Swartz, Sullivan Estate Might Not be Exempt, USA Today, August 13, 2002; Howard Goodman, As
Work Fret, Ex-CFO’s Xanadu Rises, Ft. Lauderdale Sun-Sentinel, July 25, 2002; Jon Swartz, Homes of the Rich and
Today, July 15, 2002; Philip Shenon, Law Professors Express Concern Over Pending Bankruptcy Bill, The New 22,
2002; Craig Gilbert, Kohn Deal Tightens “Luxury Loophole,” Milwaukee Journal Sentinel, April 24, 2002.
49
19 Fla. 191 (1882).
50
Id.
51
407 So. 2d 386 (Fla. 3d D.C.A. 1981).
52
Id. at 387.
53
In re McFadyen, 216 B.R. 1006, 1008 (Bankr. M.D. Fla. 1998).
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 12
barrier around a taxpayer's home sturdy enough to keep out the Commissioner of the Internal
Revenue."54 However, due to Congress' concern that seizure of a taxpayer's principal residence is
particularly disruptive for the taxpayer and the taxpayer's family, a taxpayer's principal residence
may only be seized to satisfy a taxpayer's tax liability as a last resort. Further, the taxpayer's
residence is otherwise exempt from levy unless a judge or magistrate of a United States district court
approves of the levy in writing.55 Similarly, a Federal court held that a Federal forfeiture statute
preempts Florida's homestead exemption.56 Note, however, that when a judgment is recorded prior
to the debtor establishing homestead status, the residence is subject to levy.
CERTAIN QUESTIONABLE AND FRAUDULENT CONVEYANCES MAY STILL
BENEFIT FROM HOMESTEAD PROTECTION
Florida court decisions have stated, in dicta, that the homestead exemption should not be used as an
instrument of fraud upon creditors.57 However, when presented with an opportunity to limit the
application of the exemption under circumstances smelling of fraud, the Florida Supreme Court
refused to do so. In Havoco of America, Ltd. v. Hill,58 judgment was entered against the debtor, a
resident of Tennessee, on December 19, 1990. The enforceability of the judgment was delayed until
January 2, 1991. With full knowledge of the judgment, the debtor purchased a Florida home on
December 30, 1990, using non-exempt funds that would have been available to the known creditor,
intentionally converting them into Florida homestead property. The Florida Supreme Court reasoned
that when an equitable lien is sought against homestead real property, some fraudulent or otherwise
egregious act by the beneficiary of the homestead protection must be proven and that the creditor did
not provide such proof.59 The Court determined that the debtor's conversion of funds to avoid a
creditor was not one of the three exceptions to the homestead exemption under the Florida
Constitution and as such refused to extend equitable principles.60 The three exceptions under the
Florida Constitution under which a forced sale of a homestead may take place, as cited in Havoco,
are (1) payment of taxes and assessments thereon; (2) obligations contracted for the purchase,
improvement or repair thereon; or (3) obligations contracted for house, field or other labor
performed on the property.61
54
Id. at 1009, quoting Thompson v. Adams, 685 F. Supp. 842, 846 (M.D. Fla. 1988), quoting U.S. v. Estes,
450 F. 2d 62, 65 (5th Cir. 1971).
55
See 26 U.S.C.S. F.S. § 6334(a)(13)(B) and (e) (2003); see also the Taxpayer Bill of Rights incorporated
in the IRS Restructuring and Reform Act of 1998 effective July 22, 1998.
56
United States v. One Single Family Residence Without Buildings, Without Buildings Located at 212
Airport Rd. South, et. al., 771 F. Supp. 1214 (S.D. Fla. 1991).
57
Simpson v. Simpson, 123 So. 2d 289, 294 (Fla. 2d D.C.A. 1960); Frase v. Branch, 362 So. 2d 317, 319
(Fla. 2d D.C.A. 1978) (“Great care should be taken to prevent homestead laws from becoming instruments of fraud,
an imposition on means to escape honest debts.”); Englander, 95 F. 3d 1028, 1031 (“The homestead exemption law
is intended to be a shield, not a sword, and should not be applied as to make it an instrument of fraud or as an
imposition upon creditors.”).
58
790 So. 2d 1018 (Fla. 2001).
59
Id. at 1027.
60
Id. at 1028.
61
Id. at 1022.
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 13
A potential danger of situations in which there is egregious conduct, however, is the possibility that
the Bankruptcy Court may choose to withhold discharge or dismiss the bankruptcy altogether
thereby permitting creditors to survive bankruptcy.62 However the court in In re Financial
Federated Title & Trust, Inc.,63 authorized a Trustee to impose an equitable lien and constructive
trust on the proceeds from the sale of a homestead property on the grounds that most if not all of the
funds used to purchase the property could be traced directly back to fraud. The Financial Federated
court extensively cited to Jones v. Carpenter,64 where the Supreme Court of Florida established that
the homestead "cannot be employed as a shield and defense after fraudulently imposing on others."65
The Jones court stated: "[A]ppellee in other words takes the position that as resident of the
Jacksonville Bread Company . . . he can then fraudulently or surreptitiously extract from its assets
the sum of $535.84 in cash and use the same to improve his home thereby contributing to the
bankruptcy of the Bread Company to the detriment of innocent creditors and then claim immunity
from repaying the funds or assets so taken by virtue of his homestead exemption. Purely from a
standpoint of commercial or business ethics it would be difficult to state a set of facts constituting
more reprehensible conduct, and while this court has repeatedly held that organic and statutory
provisions relating to homestead exemptions should be liberally construed in the interest of the
family home, they should not be applied so as to make them an instrument of fraud or imposition
upon creditors."66
The Financial Federated court stated that since the funds used to pay for the residence were
fraudentlty obtained, it would decide the case based upon the Jones holding, which it claimed
remains the law in Florida.67 The court stated that the imposition of the equitable lien in favor of [the
Trustee] is necessary to prevent defendants from using the homestead exemption as an instrument of
fraud and to prevent the defendant's unjust enrichment at the expense of the defrauded investors. An
equitable lien will allow a means for [the Trustee] to recover at least a portion of the fraudently
obtained funds.68
Other interesting issues discussed in Financial Federated include whether (i) lack of knowledge on
the part of the debtor's spouse would protect the homestead, and (ii) an equitable lien could be
imposed on the home owned by debtor's son and his wife when they satisfied their mortgage with
funds debtor fraudulently obtained. In both instances the opinion stated that an equitable lien should
be imposed to prevent unjust enrichment. Accordingly, notwithstanding Havaco, if the three
62
Havoco, 197 F. 3d 1135, 1143 n. 12. (“Adding to the confusion in this area is the conclusion of some
courts that, although a debtor’s fraudulent conversion of non-exempt assets into a homestead does not provide a
basis for denying him the exemption, the debtor’s fraudulent transfer may serve as the predicate for denying the
discharge. See, e.g., Marine Midland Bank, N.A. v. Mellon, 160 B.R. 860 (Bankr. M.D. Fla. 1993) (denying
discharge under 11 U.S.C. § 727(a) (2) (A) when the “debtor who clearly by law is entitled to convert nonexempt
assets to exempt assets did so in this case with a fraudulent intent.”); In Re Hendricks, 237 B.R. 821, 826 (Bankr.
M.D. Fla. 1999); In re Young, 235 B.R. 666, 671 (Bankr. M.D. Fla. 1999).”)
63
273 B.R. 706 (Bankr. S.D. Fla. 2001, aff’d. U.S. App. LEXIS 20229).
64
90 Fla. 407 (Fla. 1925).
65
Id. at 417.
66
Id. at 416.
67
In re Financial Federated Title & Trust, Inc., infra.
68
Id. at 719.
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 14
homestead requirements are satisfied for (i) acreage; (ii) residence; and (iii) ownership, where funds
used to purchase the homestead (or pay down a mortgage on a homestead) are traced to fraudulent
activity, whether for a residence owned by the debtor or by others, an equitable lien may be imposed
to prevent unjust enrichment.
PROPOSED FEDERAL BANKRUPTCY LEGISLATION
To curb the perceived abuses of the homestead exemption in Florida and other states, Congress has
been considering ways to overhaul the nation's bankruptcy laws since 1997. In 2001, separate
bankruptcy reform bills were passed by the Senate and House that, if enacted, could have an
enormous impact on the value of a homestead that may escape a bankruptcy. There was much debate
and conflict between the House and Senate versions, with one key area of dispute being the
unlimited homestead exemption permitted by several states including Florida and Texas. In April
2002, with the threat of a veto from President Bush should Congress attempt to cap state homestead
exemptions, the two sides came together and worked through several competing matters.69
However, to date no compromise has been reached. Members of the conference committee met on
May 22, 2002, but failed to report the bill out of committee because of a deadlock over a matter
unrelated to homestead bankruptcy problems.70 Then, on March 19, 2003 the House passed H.R.
975 by a vote of 315 to 113. The Bill is identical to the Conference Report from the 2002 Congress,
except that it is stripped of the unrelated homestead language that prevented the bill from passing at
the end of last year's lame-duck session. However, as of December 15, 2003, the Senate had yet to
take any action on the Bill.
If the Senate approves H.R. 975 without significant changes, it may look significantly similar to the
Conference Report that as of May 22, 2002 would significantly impact the ability of a person to
move to Florida shortly before a bankruptcy filing (or any other state with favorable homestead
provisions) to take advantage of its unlimited homestead exemption. It appears that the compromise
version of the House Bill, H.R.333, would impact the exemption by capping the homestead
exemption at $125,000, only if the debtor: (1) cannot meet a residence requirement of 40 months in a
particular state before filing for bankruptcy; (2) is shown to have committed fraud or other criminal
acts, such as violations of State or Federal securities regulations, prior to filing for bankruptcy (this
provision appears to be aimed at situations such as Enron and WorldCom); or (3) is subject to
pending criminal charges. Otherwise, in Florida, the unlimited homestead exemption would apply if
the other requirements to qualify for homestead are satisfied. The bankruptcy court can look back 10
years for instances of fraud associated with a homestead exemption claim.71 Much has been written
on whether the compromise bankruptcy bill is fair even though it retains the unlimited homestead
exemption.72 It would appear that the new bill, if enacted, should avoid some of the eve-of69
Bankr. L. Daily (BNA) (May 31, 2002).
70
Id.; Greg Hitt and Christine Whelan, Bankruptcy-Reform Bill Displays Still-Formidable Corporate Clout,
The Wall Street Journal Online, July 29, 2002.
71
Bankr. L. Daily (BNA) (April 24, 2002).
72
Dawn Kopecki, Deal Paves Way for New Bankruptcy Law; House Vote Seen Friday, The Wall Street
Journal Online, July 26, 2002; Dawn Kopecki, US House Expected to Adopt Harsh New Bankruptcy Laws, The Wall
Street Journal Online, July 26, 2002; Kathleen Day, Hill Set to Toughen Bankruptcy Law, The Washington Post, July
26, 2002; Bankruptcy Reform Bill Moves Forward, USA Today, July 26, 2002; Rob Wells, Passage of Bankruptcy
Bill Now Trickier for US Congress, The Wall Street Journal Online, July 29, 2002; US House Adjourns Without
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 15
bankruptcy maneuvering that allowed debtors similar to those in the Havaco decision to use
Florida's homestead as a successful technique to exempt significant assets from the reach of the
Bankruptcy Court. Based upon the latest string of criminal indictments of corporate executives it is
possible that legislators may be unwilling to accept a continued unlimited homestead exemption and
we must be aware of such a possibility.
PLANNING
Once a resident satisfies all of the requirements described in this article, other planning issues
remain. Deciding on the amount of equity to maintain in a residence is a very difficult decision.
From an asset protection viewpoint, a homestead owned free-and-clear provides the greatest
protection to a homeowner because his or her equity in the home is equal to its fair market value.
However, many financial planners and CPAs argue that having too much equity in a homestead is
wasteful because (i) the owner does not benefit from a mortgage interest deduction and (ii) the funds
used to satisfy the debt may do better if invested elsewhere. These issues may create conflicts among
a client's team of professionals. If asset protection is a significant client objective, it is recommended
that the individual maintain the smallest affordable mortgage and the highest equity possible in the
homestead. However, on occasion the client's financial planner and/or CPA criticize such planning
and advise the client that they could benefit from investments that would generate earnings that
would exceed the after-tax mortgage interest cost. It is important for the client to make an informed
decision on whether to maintain a mortgage on his or her residence if asset protection is an important
goal. The tax, financial and asset protection consequences of each alternative need to be considered.
Because the homestead exemption protects the equity in a homestead, the greater the equity in the
homestead, the greater the value that will be protected.
CONCLUSION
As discussed in this article, there are many traps for the unwary regarding Florida’s homestead
exemption. From a descent and distribution perspective, the homestead may pass in a manner
contrary to the homeowner’s intent if not properly devised. With respect to the valuation of the
homestead for property tax purposes, the “Save the Homes” cap may not apply if not properly
addressed. Finally, while it may appear that the Florida homestead exemption is unlimited for asset
protection purposes, there are restrictions that are not commonly understood by the press and public.
A Florida debtor cannot automatically assume that his or her homestead is exempt in its entirety
from a forced sale for the benefit of creditors. Before a debtor can be confident that the homestead
will survive attack by creditors, he or she must be sure that the residence satisfies applicable acreage
requirements, be recognized as a homestead, and be titled properly. Furthermore, if the funds used to
purchase the homestead were fraudulently obtained, an equitable lien may be imposed.
* Copyright 2003. All rights reserved.
David Pratt is the founder Pratt & Bucher, LLP, an estate planning boutique law firm with offices in Boca Raton,
Boynton Beach and West Palm Beach, Florida. He graduated from the State University of New York at Albany in 1986,
magna cum laude, in accounting; he received his J.D. degree, summa cum laude, in 1991, from Brooklyn Law School;
and he received his LL.M., in taxation, in 1993, from New York University Law School. He is a Fellow of the American
Acting on Bankruptcy Bill, The Wall Street Journal Online, July 29, 2002; and Philip Shenon, Vote on Bankruptcy
Bill is Stalled by Abortion Provision, The New York Times, July 30, 2002.
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 16
College of Trust and Estate Counsel. He is Florida Board Certified in Taxation and Wills, Trusts and Estates, and a
Director of the Education Division of the Tax Section of The Florida Bar. He is the Co-Chair of the Business Planning
and Valuation Sub-Committee of the Estate and Gift Tax Committee, and the Vice Chair of the Fiduciary Income Tax
Committee, both of the American Bar Association’s Section of Taxation.
Barry A. Nelson is founder of the law offices of Nelson & Nelson, P.A. and The Victory School For Children with
Autism, both in North Miami Beach, Florida. He is Florida Bar Board Certified in both Taxation and Wills, Trusts and
Estates. He is also an adjunct professor at the University of Miami School of Law Graduate Tax Program and a Fellow
of the American College of Trusts and Estates Counsel. He received his LL.M. and J.D. (cum laude) from the University
of Miami School of Law. Portions of this article addressing Florida asset protection were adapted from an article
published in the Florida Bar Journal in January and February 2003 written by Barry A. Nelson and Kevin Packman.
The authors wish to thank their associates, Jennifer E. Zakin and Kevin Packman, respectively, for their assistance in
preparing this article.
H:\ARTICLES\HOMESTEAD EXEMPTION\2004 NELSON & PRATT ARTICLE\2004-01 FINAL HOMESTEAD PITFALLS TRAPS - PRATT NELSON.DOC
NELSON & NELSON, P.A. y 2775 SUNNY ISLES BOULEVARD, SUITE 118 y NORTH MIAMI BEACH, FLORIDA 33160 y 305.932.2000 T y 305.932.6585 F
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 17
Tax Folio No:
WAIVER OF HOMESTEAD
COMES NOW, ___________, the spouse of ___________, and states the following:
Whereas, __________ and __________ own a residence located at: _________________,
___________ County, Florida, and legally described as:
LEGAL DESCRIPTION
Whereas, ___________ and ___________ have transferred their interest in the residence to
the __________ REVOCABLE TRUST DATED _________.
Whereas, notwithstanding this waiver, the undersigned understands that should ________
predecease the undersigned, the undersigned would have an ownership interest in the residence by
virtue of the laws restricting the distribution of Homestead Property;
Whereas, the undersigned desires to waive this Homestead right, and retain no rights or
interest in this residence owned by the ___________ REVOCABLE TRUST DATED _________,
nor any and other residences which may now or in the future become the Homestead of ________.
Now, therefore, in exchange for receipt of valuable consideration, which receipt is hereby
acknowledged, the undersigned states as follows:
1.
The undersigned releases all rights, claims, demands, or interest that the undersigned
may have based on the undersigned's marriage to __________ in any real property of
____________ because of the Homestead Property provisions of the Florida
Constitution or any Florida Statute concerning the property as Homestead. The
foregoing is intended to and shall be a waiver of all rights by the undersigned of any
interest in the property of the other in accordance with Florida Statute 732.702
(2003).
2.
Pursuant to Florida Statutes Section 709.08, Durable Powers of Attorney, the
undersigned hereby appoints __________, as Attorney-in-Fact, to execute any and
all documents necessary to accomplish this waiver in the future, should any signature
be required. In the event that _________ dies, resigns, or becomes incapacitated, or
is unable to continue serving for any reason, the Grantor appoints ___________, to
serve as Successor Attorney-in-Fact. In the event that ___________ dies, resigns, or
becomes incapacitated, or is unable to continue serving for any reason, the Grantors
appoint _____________ to serve as Successor Attorney-in-Fact. This Durable Power
of Attorney shall not be affected by subsequent incapacity of the undersigned except
as provided in Florida Statutes Section 709.08.
EXHIBIT A
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 18
Dated this _____ day of ___________________.
______________________________
Witness
_________________________________
___________________
______________________________
Printed Name of Witness
______________________________
Witness
______________________________
Printed Name of Witness
State of ________________ )
) ss.
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
__________________, by ________________, who [ ] is personally known to me or [ ] has
produced ____________________________ as identification and who did not take an oath.
Notary Public
Print Name:
My Commission Expires:
EXHIBIT A
Florida’s Homestead Laws: Pitfalls And Traps For The Non-Florida Practitioner
Page 19
DECLARATION OF DOMICILE AND CITIZENSHIP
TO THE STATE OF FLORIDA AND COUNTY OF _____________________:
__________________, being duly sworn, deposes and says that this is my Declaration of
Domicile and Citizenship in the State of Florida that I am filing this day in accordance and in
conformity with Section 222.17 of the Florida Statutes:
I was formerly a legal resident of ____________ and I resided at ______________.
However, I have changed my domicile to and am and have been a bona fide resident of the State of
Florida since the ____ day of __________________, ______, and I reside at
___________________,
____________ County, Florida, and this statement is to be taken as my Declaration of Citizenship,
legal residency and domicile in the State of Florida, to the exclusion of all others.
I understand that as a legal resident of the State of Florida, I am subject to intangible taxes,
that I must purchase Florida license plates for motor vehicles, if any, owed by me or my spouse, and
that my estate will be subject to probate in the Florida courts, and that if I vote, it must be in the
precinct of my legal domicile.
______________________________
________________________
Address
STATE OF FLORIDA
COUNTY OF ______________
)
)
)
ss.
SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED BEFORE ME this _____ day of
____________________, _______, by _______________, who [ ] is personally known to me, OR [
] has produced ______________________ as identification and has taken an oath.
My Commission Expires:
_____________________________
Notary Public; State of Florida
Print Name:
TO BE EXECUTED AND FILED WITH DEPARTMENT OF FINANCE,
DIVISION OF RECORDING
Penalty for perjury: Up to five (5) years in state prison and
$5,000.00 fine. Chapter 837.012, Florida Statutes.
EXHIBIT B
Source Exif Data:
File Type : PDF File Type Extension : pdf MIME Type : application/pdf PDF Version : 1.4 Linearized : Yes XMP Toolkit : Adobe XMP Core 4.0-c316 44.253921, Sun Oct 01 2006 17:14:39 Creator Tool : PScript5.dll Version 5.2.2 Modify Date : 2008:05:19 12:10:59-04:00 Create Date : 2008:05:19 12:10:59-04:00 Format : application/pdf Title : Microsoft Word - 2004-01 FINAL Homestead Pitfalls Traps - Pratt Nelson.doc Creator : shelley Producer : Acrobat Distiller 8.1.0 (Windows) Document ID : uuid:9bdbddac-124e-48b2-9665-318e5e95c383 Instance ID : uuid:95cb7e20-1c4e-4531-ae99-5beb1e449a9b Page Count : 19 Author : shelleyEXIF Metadata provided by EXIF.tools