As our faithful readers (and workshop attendees) may recall, Florida homestead law is meant to protect a person’s primary residence from creditors, but its quirks can cause major problems, particularly for a blended family. A recent court decision illustrates that point in a situation where another potent ingredient was thrown into the mix: a marital settlement agreement. A “marital settlement agreement” is a legally-binding, final agreement between the husband and wife in a divorce case.
In the case of Friscia v. Friscia, a man with a blended family passed away, and war ensued between his current wife (Wife #2) and his former wife (Wife #1). The man died owning two homes in Florida: the one he lived in with Wife #2 and another one occupied, pursuant to a marital settlement agreement, by Wife #1 and the children of the first marriage. This second home (the Family Home), was the one at the heart of the battle.
Wife #2 needed money to pay her husband’s debts and other probate costs and fees, so she decided to try to sell the Family Home out from under Wife #1 and the kids. When the court rejected this move, determining that the Family Home was homestead property and therefore protected from creditors, Wife #2 tried to use that ruling to her advantage. She showed up at the Family Home and demanded to be let in, arguing that Florida homestead law gave her the right to access and use the Family Home during her life.
Wife #2 got the general rule right: When a person dies leaving both a current spouse and kids from another marriage, the surviving spouse is entitled to a “life estate” in any homestead property (the right to live in and use the property during her life). However, she did not realize the legal strength of the marital settlement agreement, which said that Wife #1 was entitled to exclusive use of the Family Home until the youngest child graduated from high school. The court decided that the marital settlement agreement trumped the Florida homestead law, which means that Wife #2 has no right to do anything with the Family Home until after her husband’s youngest child graduates from high school.
While this case may seem unusual and complicated, settlement agreements are very common, especially in divorce cases. The intersection between family law and estate planning is just one more reason to consult with experienced, competent advisors to ensure that your family is taken care of in the way that you intend.