PLANNING FOR FLORIDA HOMESTEAD PROPERTY: IT CAN BE TRICKY
In our September 9, 2010 newsletter, we warned of a change in Florida’s homestead law effective October 1, 2010. We updated our clients, as well as our readers, and many of them heeded that warning and made changes to their estate plans. Clients of other attorneys may not have gotten the message.
Recently, we became involved in an estate dispute over homestead property. The deceased father and husband (to wife number 2) had a trust drafted by a competent local attorney several years ago. The trust explicitly stated that the homestead property was to be sold after his death and the proceeds split 3 ways, among the wife and his 2 children.
Unfortunately, neither the decedent nor his attorney thought to update the trust after the law changed. Because the homestead law trumps the provisions of the trust, the evil stepmother will be able to keep 50% of the proceeds when the home is sold (and could have prevented the sale entirely if she had wished to remain living in the home – for the rest of her life). This not only is contrary to the expressed wishes of the decedent, but it also means that his disabled daughter will miss out on $50,000 that she desperately needs.
There are several other tricky aspects to handling homestead property so that it remains protected from not only reditors’ claims, but also claims for expenses necessary to administer the estate of someone who has passed away. Proper planning means spending the time with an attorney counseling you on your options and updating your plan on a regular basis so that changes in the law don’t render it ineffective.