Florida court holds property held in trust is decedent's homestead

Posted on Oct 30, 2010

In Florida, Article X, Section 4, of the Florida Constitution treats improved real property that the Decedent (i.e., the person who has died) lived in as her or her domicile (place where he or she intended to reside permanently) at his or her death, as the Decedent’s “homestead” property.  Section 4 of Article X of the Florida Constitution is printed below.

§ 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.

One advantage of having improved real property treated as “homestead” property is that creditors of the Decedent’s estate cannot force a sale of the homestead if the homestead property was willed, or transferred by operation of Florida intestate (intestate refers to the estate of a decedent who died without a valid will) statutes to the Decedent’s heirs.  However, since the late 1980s, revocable trusts have become very popular.  Among the Florida legal community, many articles have been written indicating that since Section 4 states that property must be “owned by a natural person” property held in a revocable trust is not owned by a natural person and therefore not homestead property and could be subject to creditors. 

This issue is becoming more common because many Floridians are dying while their homestead property is owned by the trustee of a revocable trust.  What is also more common in this economic environment is that Floridians are dying owning some improved real property where the debt exceeds the value of the property.  Thus, creditors are searching for assets and are trying to claim that trustee owned homestead property is not really the decedent’s homestead. 
The Third Circuit Court of Appeals recently addressed that issue in James Aronson, et. Al. v. Doreen Aronson, Third District Case No. 3D09-773 filed on October 27, 2010.  In Aronson a married individual had died, and at the time he died the condominium he was living in was owned by himself as the trustee of his revocable trust.  At the time of his death, the trust become irrevocable, and his two children of a prior marriage became trustees.  The widow filed various claims and the trial (lower) court declared that the condominium was not exempt from a forced sale.  The Third District disagreed without much discussion and reversed the trial court’s determination that the condominium owned by the trust was not the Decedent’s homestead.  Thus, Florida lawyers now have at least one decision that specifically states that property held in a revocable trust at the decedent’s death is the decedent’s homestead property.  For more information contact Matthew A. Linde, P.A. today!