If you own a home in Florida, no doubt you have heard the terms, homestead protection or exemption. But, do you know what those terms mean and how you and your family are affected? Florida is one of a few states that offers homestead protection. The rules governing homestead protection or exemption apply in the following 3 contexts: exemption from real estate taxes, creditor protection and transfer at death.
REAL ESTATE TAX EXEMPTION
Your primary residence is entitled to receive certain exemptions from real estate taxes. The Florida Department of Revenue's website has a full list of exemptions including, among others, a cap on assessments called "Save Our Homes", exemptions for widows, veterans and the blind. These exemptions give you significant savings on your real estate taxes.
Florida prohibits creditor judgments from attaching to your homestead so that the credit holder cannot force you to sell your home in order to pay off a judgment. This protection can carry on to certain family members who inherit your homestead after you die. However, there are certain creditor claims that can still attach to your homestead such as IRS liens, foreclosures, past due homeowner association fees, and contractors’ liens.
TRANSFER AT DEATH
The laws governing transfers of homestead at the owner’s death can be extremely confusing because of Florida’s restrictions on who you can, and cannot, leave your Florida homestead to after you die. This will depend on whether or not you were married at the time of your death and whether or not you were survived by minor children.
- If you have no spouse and no minor children you can leave the homestead to whomever you want.
- If you have a minor child and you are married and your homestead is titled in joint names with your spouse, then your protected homestead goes to your spouse by right of survivorship. But if the property is in your name only, your spouse can either take a life estate (right to live in the property for his or her remaining lifetime) with the home passing to your children at his or her death, or he or she can elect to take a ½ ownership interest and the children will receive the other ½.
- There are also specific rules governing transfer of your home if you have a spouse and adult children whereby rules may differ depending on whether or not your spouse was also the parent of those children.
- If you own the home alone, your spouse can waive all of his or her rights to the protected homestead in a prenuptial or postnuptial agreement whereby you can leave the property to whomever you wish subject to the rules for minor children.
Florida homestead laws can be confusing and complicated to understand. While the laws can benefit you during your lifetime, at your death, the transfer of your property can affect your survivors and lead to disappointment, division, envy, hatred, greed and more. To insure that you understand all aspects of the Florida homestead laws, you should consult an experienced estate planning and probate attorney to help you plan appropriately and avoid family setbacks, hardships and discontent after you have passed.