By James W. Mallonee
Should I deed my homestead to my trust frequently comes up as a question along with whether a person should have a trust prepared for them. In this article the focus is on whether it is better to title your homestead property into your trust.
The short answer is that it depends. The dependencies are: 1) if you are married at the time of retitling your homestead to your trust 2) if your trust is in your name only and you are married; or, 3) you are retitling your homestead into a joint trust (husband and wife).
The history behind Florida’s homestead was the legislature’s attempt to prevent the married female population and minor children from a marriage from becoming a ward of the state in the event the husband should die and leave the family’s homestead property to someone else. Remember that in the early 20th century and before then, Florida women could not own property (hard to believe, but such practice existed).
The legislature then created Article X, Section 4 of Florida’s constitution which in pertinent part said you cannot deed your property away from your spouse or your minor children. Thus, if the homestead property was in one of the spouse’s name only, the property could not be devised or sold without the spouse signing off on it. More importantly, if there were minor children in the household and only one spouse held title to the homestead, the property could not be devised at all. One of the exceptions being that the property could be exclusively devised to the surviving spouse at the deceased spouse’s death.
The next thing that needs to be cleared up is how homestead is determined. It is not having the property appraiser determine it to be your homestead for taxation purposes (although that is viewed as an evidentiary factor). It always comes down to what your intent is relative to the homestead. You have to show what your intent is relative to your homestead and that is measured by conduct. Your conduct can be measured by evidence showing your desire to make your homestead your permanent residence.
Once homestead has been determined, we now address the reasons why or why not titling your homestead into your trust may or may not make sense. The first reason why you should not title your property into your trust has to do with whether you are married or anticipate marrying in the future. Once a person marries or is presently married and they own homestead property in their name only, Florida’s Constitution is potentially violated provided the person dies and fails to place the surviving spouse’s name on the deed prior to death; or, fails to Will the property in its entirety to the spouse. With regard to a trust, if you retitle the property to you as trustee of your trust and you are married, you have devised the homestead away from your spouse in violation of Florida’s Constitution and Statutes. This is a recipe for disaster and your spouse will not be happy with your failure to devise or deed the property her as your spouse.
What happens should you remarry or get married and the property is in your name only as trustee of your trust at the point of marriage. Once again, at death you would be in violation of Florida’s Constitution and Statutes. One of the difficulties when marrying is remembering to enter the new spouse’s name on the deed following the marriage ceremony or changing the devisee of your Will or Trust naming your new spouse as the exclusive taker of the homestead. Don’t forget, if there are minor children in the household, no devise of the homestead can occur.
Some people believe that if they have a joint trust all of the forgoing issues go away because the trustees are both the husband and wife fulfilling the requirement to have the homestead property owned by both spouses. The problem with this that the homestead property has been devised away from the spouse even though both signed the deed devising the property to themselves as trustees of their joint trust. This becomes especially sensitive if the joint trust becomes irrevocable at the death of the first spouse. The reason for this is that some title insurers view the irrevocability of the joint trust as not allowing the surviving spouse the ability to convey the property out of the trust for purposes of selling, devising or correcting Constitution violation.
What happens if a violation of the Florida’s Constitution and Statutes occurs should the homestead be titled into a trust? The property will be treated as intestate or by operation of law become a life estate to the surviving spouse or tenant in common with another party. In some situations where the trust becomes irrevocable at the death of the first spouse, the property is removed from the trust and treated as intestate property. This almost always occurs should the property be titled in a joint trust that became irrevocable at the death of the first spouse’s death.
Why is this a big deal? If it passes according to the intestate statutes, the property may flow to someone you do not want it to go to. More importantly, the property may have a cloud over it until all of these issues are worked out in a court room. What is the recommendation, it’s simple; there is no reason to place your homestead into a trust given the large Federal estate tax exclusion along with all the protections Florida provides its homestead owners from creditors. My recommendation is not to do it.
James W. Mallonee (Jim Mallonee) is a graduate with a B.A. degree from the University of South Florida and a Master of Science degree from Rollins College in Winter Park, Florida. He obtained his Juris Doctorate from the University of the Pacific, McGeorge School of Law in Sacramento, California. Prior to returning to Florida to practice law, Mr. Mallonee was employed by Intel Corporation for 22 years in such locations as New Jersey, Florida and California.
In addition to being a member of the Florida Bar since 2003, Mr. Mallonee serves on the Charlotte Community Foundation Committee for asset allocation and teaches Business Law at State College of Florida. Mr. Mallonee is also on the Board of Directors for the Military Heritage Museum located in Charlotte County, Florida.
His firm practices law in the following areas: Probate, Wills & Trusts, Guardianships, and Litigation in the areas of Real Estate, Guardianships and Estates. The firm has two locations in Venice and Port Charlotte, Florida.
James W. Mallonee, P.A.
946 Tamiami Trail, #206
Port Charlotte, FL 33953
Facsimile (941) 206-2224
871 Venetia Bay Blvd., #225
Venice, FL 34285