Florida Residency/Homestead
Todd W. Fennell, Anthony P. Guettler, Troy B. Hafner, William N. Kirk, Christopher K. Pegg
Florida's homestead laws are quite unique and far-reaching. When an individual is domiciled in Florida and owns the principal residence in which he or she resides, that property is the owner's "homestead" and is subject to these often surprising homestead laws.
Homestead owners are typically quite familiar with the homestead real property tax exemption which reduces the yearly real estate tax obligation that would otherwise apply. For most homesteaders, this benefit comes in two forms. First, there is a $50,000 reduction off of the otherwise taxable value of the home as assessed by the county Property Appraiser. The second benefit is often much more valuable. It is commonly referred to as the "save our homes" cap, which imposes a limitation each year on the amount by which the taxable assessment can be increased over the prior year's figure. That limitation is the lesser of three percent of the prior year's figure or the rate of inflation based upon the published consumer price index. Where property values have increased rapidly over short periods of time, this "save our homes" limitation can result in a yearly tax bill that is a mere fraction of what would otherwise be owed if the homestead tax exemption had not been continually maintained. Although qualification for the homestead tax exemption is based on various factors confirming that the property is owned by and is the primary residence of the homesteader (or certain members of the homesteader's family), an application must be affirmatively made with the Property Appraiser's office in order to receive the tax benefits. As long as there is no change in title or circumstances, the application need not be repeated yearly; and the exemption, once granted, will remain in place indefinitely.
The other principal features of Florida's homestead laws are not as well known as the tax exemption, but are often much more significant, particularly in the context of estate planning or probate and trust settlements upon death. Property which legally constitutes the owner's homestead (whether or not any filing was ever made to obtain the homestead tax exemption) is often subject to very significant restrictions on its transferability upon the owner's death. Specifically, when a homestead owner dies survived by a spouse and/or a minor child, any bequest of the property which the owner may have attempted (other than an outright bequest of the entire interest to the surviving spouse if there is no minor child) will be deemed to be invalid and the law will step in to establish the new title to the property. These unique Florida homestead restrictions are intended to provide protection for the homestead owner's family by ensuring that the owner cannot disinherit his or her dependents, but the application of these rules often leads to results that would not be intended or favored by any of the family members. In fact, they can undermine very legitimate estate tax or other trust planning efforts that are important to all the family members. Because these provisions are often unknown to the average citizen and to most non-Florida attorneys or other estate planning advisors, the homeowner's surviving family members are all too often unpleasantly surprised by the impact of these rules, sometimes with disastrous consequences.
Apart from the limitations that exist when a homestead owner is survived by a spouse or a minor child, there are other surprising restrictions that can limit the very type of clause in a Will or trust document that is allowed to pass a homestead property interest. Homestead owners or their advisors who are not familiar with these rules can inadvertently and drastically alter the passage of wealth among the heirs of the owner.
Finally, Florida homestead laws provide powerful protections against the claims of the deceased owner's creditors. However, these protections may be forfeited if the deceased owner's Will or trust effectively leaves any part or all of the interest in the home to a charitable organization or to any person not related to the decedent.
In short, both estate planning and estate administration for Florida residents require careful focus on these and other unique homestead issues that present very significant traps for unwary residents and their professional advisors. The attorneys in the Estate Planning and Tax Group at Gould Cooksey Fennell have considerable experience in dealing with Florida homestead law issues.
Gould Cooksey Fennell, P.A., Attorneys at Law, has offices in Vero Beach, Florida. The firm serves clients throughout the region including Brevard County, Indian River County, St. Lucie County, Martin County, Okeechobee County and Palm Beach County. This includes the following cities: Melbourne, Palm Bay, Fellsmere, Sebastian, Vero Beach, Ft. Pierce, Port St. Lucie, Okeechobee and West Palm Beach, Florida.