Trusts and Florida Homestead Property

August 29, 2012

florida-case-law.jpgFlorida is a rather unique state in rights associated with homestead exemptions from forced sale. In a nutshell, it is nearly impossible for creditors to force the sale of a homestead (a situation famously highlighted by OJ Simpson, who purchased a large estate in Florida in part to avoid creditors).

Florida's homestead exemption also protects spouses and children of decedents: a spouse cannot transfer the property by will if survived by a spouse or minor child. While this rule often plays a positive role for families of decedents, certain cases show potential perils. Those cases primarily involve "blended families"; i.e., situations where a person late in life remarries. Florida's homestead exemption seems to presume that the surviving spouse will also be a biological parent of the surviving children, but that is not always the case. Blended families can be a lightening rod of litigation, as highlighted by the case of Aronson-v-Aronson.pdf.

This case is the third time the parties have been in the appellate court. These parties have been fighting for over a decade. Here's the story: a Mr. Aronson died after creating a revocable trust. Under the terms of the trust, his wife Doreen would take a life estate in the Key Biscayne condo the two of them shared. After that, the condo would go to Mr. Aronson's sons. However, in the time between creating the trust and dying, Mr. Aronson deeded the same condo directly to Doreen.

This created some problems, as there were basically two conflicting deeds. The first time through litigation, the court held that once deeded to a revocable trust, the individual could no longer validly deed the property to anyone else. The court then reconsidered, and completely reversed itself. Instead, under the new rule, the condo was not ever a valid trust asset because it was an invalid devise of homestead property. Basically, the moment Mr. Aronson died, his homestead transferred to his wife as a life estate, and thereafter to his surviving sons (so, basically, the law coincided with the terms of the trust anyway).

If this sounds confusing, don't worry. It took ten years of litigation to figure all this out, and that involved a Florida Appeals Court having to reverse itself before getting the law right. Although this is confusing, much of the litigation in Aronson could have been avoided had Mr. Aronson used a qualified attorney to help him with his estate planning. Still, do not forget the endless array of possibilities that may arise in blended family situations.

Finally, it's worth noting that some of the law in this area changed in 2010 (many years after Aronson's litigation began). Now, instead of automatically taking a life estate, a surviving spouse has six months to opt out of the life estate and take a 50% share as a tenant in common of the homestead property. This option may be more beneficial for certain parties, and anyone in this situation should consider talking to an estate planning attorney for advice.

If you are in a similar situation, or if you have any estate planning questions, contact a Jacksonville Estate Planning Lawyer at Law Office of David M. Goldman PLLC.