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, … X, §4(c) of the Florida Constitution; F.S. . M.D. X, Section 4(a)-(b) of the Florida Constitution; restrictions on devise and alienation, Art. §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. N.D. Fla. 1993)(holding a 99-year lease was an ownership interest sufficient to satisfy the requirements of Florida’s homestead exemption to forced sale). 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. For example, four municipalities in South Florida have incorporated since 1990: Aventura, Key Biscayne, Pinecrest, and Sunny Isles Beach. Thank you for visiting the Sarasota County, FL. The Drucker opinion stated, “A bare lot unoccupied cannot be a homestead. 17 In re Russell, 60 B.R. '” (Appearing at page 1351, citing Spitzer ). The next case cited by those who feel that the decedent’s homestead, in those circumstances, is not subject to probate is the case of Cavanaugh v. Cavanaugh, 542 So. 1018 (Bankr. The reference is nearly the same in each. The identity of the legal owner of the homestead can have dramatic impact on the availability of the exemption. The first $25,000 in property value is exempt from all property taxes, including school district taxes. M.D. Fla. 1995). He is chancellor of the Academy of Probate and Trust Litigation Attorneys and the author of The Florida Bar Probate System; Ch. This means that the property cannot be forced to be sold in order to pay creditors of the probate estate. If you qualify, you can reduce the assessed value of your homestead up to $50,000. 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. 2d 1197 (Fla. 2d D.C.A. 2d 708 (Fla. In denying homestead protection, the court reasoned that the debtor’s actions were inconsistent with one preparing to move into a new homestead. 2d at 204 (holding “only so much of the proceeds of the sale as are intended to be reinvested in another homestead may be exempt. 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.1 Often referring to it as a legal loophole, detractors of the unlimited homestead exemption point out that the exemption permits debtors to divert substantial assets to the purchase of new and extravagant homes that can be shielded from creditors under Florida’s state constitution. 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. This strained interpretation is neither logical nor practical. Florida Probate Rule 5.340(a) provides in part: “Real property appearing to be homestead property shall be listed and so designated.” This suggests the reason for the “Homestead Real Property” classification as the first subdivision of The Florida Bar inventory form entitled “REAL ESTATE IN FLORIDA— Homestead.” The committee note to this rule discloses “Constitutional homestead real property is not necessarily a probatable (sic) asset. 2000), citing Keveloh v. Carter , 699 So. It states: (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 160 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. Several other courts have reasoned to the contrary that “a debtor cannot transform a movable chattel into a homestead by choosing to leave the chattel in one place or by failing to maintain the chattel in a movable condition.”23 Consistent with this approach, the court in In re Hacker, 260 B.R. 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. If your name is not listed as the owner of record, we offer a ‘New Owner’ section to complete. 1018 (Bankr. and holding that a condominium was not homestead until after a Pennsylvania judgment was registered with the Florida court because before then the debtor did not actually use and occupy the property. 2d at 633. Homeowners in Florida may be entitled to a substantial tax benefit known as the Florida Homestead Tax Exemption, which is a two-pronged benefit in the form of: An exemption of up to $50,000.00 off the taxable value of the homestead property, and; A 3% annual limit on any increase to the assessed value of the homestead property for tax purposes (known as the … The three questions are: 1) May the decedent’s homestead (real property) be devised? 2d 410 (Fla. 3d DCA 1981), the concurring opinion indicates “the property in question was neither a probatable (sic) asset over which the personal representative had any right of possession nor did the probate court even have jurisdiction over it.” (Appearing at page 413). Fla. 1993) (reversed on other grounds). B Fla. 2000), citing. If the PR could sell the property to pay the claims of creditors, could it not also sell the property and use the proceeds to pay taxes or expenses of administration? 2d 107 (Fla. 1976). One Main Street, 4th Floor Fla. 1986). Article VII, Section 6 (a) of the Florida Constitution established a $5,000 exemption from property tax property for Florida residents home ownership. ~ From the Rules Regulating The Florida Bar, The American Influence on International Commercial Arbitration: Doctrinal Developments and Discovery Methods. Comment: Item 1 would be universally agreed among lawyers and item 2 nearly so. A board of county commissioners or the governing authority of any municipality may adopt an ordinance to allow an additional homestead exemption of up to $50,000. Accessed May 31, 2020. . This statute (F.S. With regard to a permitted devise of decedent’s homestead, it makes no difference whether the devise is a specific devise or a residuary devise, since devisable homestead will pass under either type. The authorities (and the conclusions reached in this article) are basically agreed under such situation, the decedent’s homestead is not an asset subject to probate, is not subject to the claims of creditors, and may not be devised (except to the spouse in the absence of a minor child). . “, F.S. The SOH law cap begins when the county grants the initial exemptions … That case can be read (or misread) to suggest that any devise will subject the property to the claims of creditors (and to probate), even if that person was an “heir” who, if the property had passed by intestacy, would have taken it free of the claims of creditors. . 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.”. In, , lumber placed on the property was insufficient; in, , the debtor’s renting three houses on a plot of land he owned to tenants while saving money to renovate the houses into one large homestead was insufficient; and in. That interpretation makes no sense and it is not possible to glean more from the opinion. Similarly, the Florida Supreme Court ordered the division and sale of property when a portion of the property was not being used as homestead. In any case, you should have available for quick reference Kelley’s Paradigm, which is reproduced with this article. Fla. 1986). 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. 727 (Bankr. The concepts and rules you learned in Part I regarding limitations on the decedent’s ability to devise his homestead and whether that real property is now subject to creditors’ claims need to be applied to common fact scenarios which we face in everyday practice. 156 B.R. Practitioner’s Notes: Essentials of Estate Planning for the Professional Athlete. 2d 629 (Fla. 1st DCA 2001), funds that a debtor received from a commercial lender and which were intended to be used to acquire homestead were not protected under the homestead exemption. There are thus 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. The court stated that if a judgment is recorded prior to the time the debtor established homestead the property is subject to lien under Florida law); Perez v. Marti, 770 So. 2d, 946, 948 (Fla. 1988), aff’g, 509 So. There are three parts of the Florida Probate Code that may be inconsistent with discussions above. The alternative construction is since the case law of the state is clear that under the proper circumstances, the property may be subject to the claims of creditors, the intended meaning of the phrase “except the homestead” is “except the decedent’s homestead not subject to creditors’ claims.” Charles E. Early, a Sarasota lawyer regarded by many (including your writer) as a scholar of the law, has suggested that the two statutes in question be amended to delete the reference to homestead. 2d 767 (Fla. 1st DCA 1987), cause dism. The homestead is in no wise an asset of the estate of a decedent.” (Appearing at page 772-773). 1) The property may be devised without limitation, but was not. 222. X, Section 4(c) of the Florida Constitution; and exemption from taxation per Art. X, §4 of the Constitution of the State of Florida. See also In re Nofsinger, 221 B.R. While some may benefit from such planning, many debtors, as well as reporters writing about them, are unaware of the requirements that must be satisfied to obtain the benefits of Florida’s homestead exemption. S.D. In Burdick v. Burdick, 399 So. He is a graduate of the Washington University School of Law (J.D.) For example, In re Herr, 197 B.R. Florida law provides for lower property tax assessments on homestead property. 20 “Probate Litigation” in Basic Practice Under Florida Probate Code. Kevin E. Packman is an associate with the law offices of Nelson & Levine, P.A. §732.4015. 1978).) 1 Often referring to it as a legal loophole, detractors of the unlimited homestead exemption point out that the exemption permits debtors to divert substantial assets to the purchase of new and extravagant homes that can be shielded from creditors under Florida’s … Fla. 1987). It appears that actual occupancy on the property for which homestead status is desired is a prerequisite to a court granting the property such character.28 However, precedent may exist to allow homestead protection in very limited situations where property is being prepared for occupancy. Fla. 1992); 278 B.R. In Part II, the article will discuss certain federal limitations on the homestead exemption (such as federal tax liens), fraudulent transfer issues, and proposed federal bankruptcy legislation that would severely limit homestead protection for non-Florida debtors seeking to establish domicile and move to Florida to avoid creditors. The beneficiary’s or heir’s title is subject to the personal representative’s right to possession during probate administration and the personal representative’s right of sale if there is a general power of sale in the will, or with order of court (in the absence of a general power of sale) if sale is required to pay debts, family allowance, estate and inheritance taxes, claims, charges, and expenses of administration, to enforce contribution, to equalize advancements or for distribution. The debtor claimed a homestead exemption for a portion of the property that surrounded the nonexempt portion, eliminating any reasonable access to the nonexempt portion and rendering it valueless. Vickers v. Pelsey, 779 So. . 2d 284, 290 (Fla. 3d D.C.A. Fla. 1991), the bankruptcy court held that a noncitizen of the U.S., who had failed to maintain her U.S. visa status and had lost the right to remain in the U.S. at the time she filed for bankruptcy, was not a resident of Florida for purposes of the homestead forced sale exemption. §733.607 (Possession of estate) — provides: “Except as otherwise provided by a decedent’s wilt, every personal representative has a right to, and shall take possession or control of, the decedent’s property, except the homestead,.. . The law of Florida has been settled for some time that the decedent’s homestead, which may otherwise be devised, may be devised by the residuary clause of a will. There is a standard $25,000 exemption plus an additional exemption up to $25,000. They ask, “Who could conceivably have any interest in this property—and whoever that is, get a deed from everyone in sight.”. . 2) It is not subject to the claims of decedent’s creditors (whether or not devised). 1) The property may be devised but only to the spouse. Co. v. Wilcox, 13 So. M.D. State law allows Florida homeowners to claim up to a $50,000 Homestead Exemption on their primary residence. As a result, relying on Englander, the court ordered the sale of the homestead property and an allocation of the proceeds, with the proceeds which exceeded those attributable to one-half acre being made available to creditors. Thus, homestead may be claimed by debtors for structures in which they have an ownership interest even though the debtors do not own the property on which the structure is situated. Fort Lauderdale, Florida 33301. F.S. 1962). In In re Estate of Ritter, 407 So. F.S. , a plot of land the debtor and his family cultivated but upon which they did not live, was insufficient for homestead exemption. The Third DCA affirmed. 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. 196. M.D. Homestead Exemption, Save Our Homes Assessment Limitation, and Portability Transfer When someone owns property and makes it his or her permanent residence or the permanent residence of his or her dependent, the property owner may be eligible to receive a homestead exemption that would decrease the property’s taxable value by as much as $50,000. if passed, will supersede this analysis and replace it with a 40-month residency requirement prior to filing for bankruptcy in order to obtain homestead benefits of the new domicile state. 594 (Bankr. Custodian has a non-cumulative election during each calendar year to charge reasonable compensation for services performed during that year. LEXIS 547, at *4 (Bankr. 559, 567 (Bankr. . The best that can be said of Hill is that it should not be cited as precedent for anything with the hope that the Third District will retreat from it at the first opportunity. The first of these is illustrated by the fact that some lawyers would say if the property is devised, it is both subject to the claims of creditors and must be probated. The former is exempted both from creditors’ claims and the requirement to contribute to taxes, the latter is exempted from neither. The homestead exemption is deceptively simple on its face. In this part of the article, we have focused on the homestead exemption provided by the Florida Constitution in Art. The 11th Circuit Court of Appeals reinforced Englander when given an opportunity with In re Kellogg, 197 F.3d 1116 (1999). Similarly, in In re Meola, 158 B.R. 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. Fla. 1999). Petitioner believes that the decedent’s homestead did not pass to the spouse or persons who are the heirs of the decedent and it is an asset in the hands of the personal representative for payment of creditors’ claims and other proper purposes of administration. 2d 946 (Fla. 1988). In Price, how could the PR sell the house in order to make the proceeds available to the creditors? Fla. 1998), following, which provided the parties 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. Fla. 1999). shall be assets in the hands of the personal representative: [for purposes of administration].” These two sections clearly proscribe the personal representative’s possession or control of “the homestead” and make no exception for the instance where it is devised to a nonqualified beneficiary and is, therefore, clearly subject to the claims of creditors just like “[a]ll [other] real and personal property of the decedent.. . , 166 B.R. Authority: In re Estate of Price v. West Florida Hospital, Inc., 513 So. at 546, quoting In re Major , 166 B.R. Clifton v. Clifton, 553 So. In addition to persons … 11 U. Miami Ent. 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. The general rule appears to be that if a debtor leaves his home due to financial, health, or family reasons the debtor will not be considered to have abandoned the homestead. 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. Authority: art. S.D. Trammell holds that where there was a permitted devise to one who was not an heir (in this case to “my good friend Bessie”) the decedent’s homestead is subject to the claims of creditors. Until 1997 when the U.S. Supreme Court denied cert in the case In re Englander, 520 U.S. 1186 (1997), thereby letting stand the decision of the 11th Circuit Court of Appeals,6 the extent to which homestead protection was available for a residence on more than one-half acre within a municipality was uncertain.7. 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