Will I Lose the Florida Homestead Exemption if I Put My Home in a Trust?

One of the best things about living in Florida is the Sunshine State’s homestead exemption, especially if you are approaching estate planning in Boca Raton. That being said, many estate planning strategies in Florida revolve around trusts. You might have heard that if you put your personal residence in a trust, you will lose that all-important homestead exemption. Is this really true? To receive accurate guidance, consider meeting with an experienced estate planning attorney.

What Does the Florida Constitution Say About the Homestead Exemption?

Under the Florida Constitution, creditors can not force you to sell your home in order to pay your debts. This applies to almost all types of debt except unpaid taxes, mortgage debt, and certain liens. The asset protection this offers is extremely beneficial for all Florida residents, although it may be particularly attractive to those exploring asset protection strategies during retirement and estate planning.

There is no upper limit to this exemption. Theoretically, you could have millions of dollars of unsecured debt, and creditors still would have no way to force you to sell your home. This opens up considerable opportunities and possibilities, especially for those who relocate to Florida, establish a domicile in the Sunshine State, and effectively wipe out their debts by “shielding” their money within the Florida real estate market.

But what about the trust issue? Under the Florida Constitution, this exemption only applies if you have real or “equitable” title to the property in question. In other words, you must legally own the property in order to benefit from the exemption. When you move property into a trust, you cease to be the legal owner of that property. In other words, trusts could negate the homestead exemption.

You Can Easily Maintain the Homestead Exemption After Putting Your Property Into a Trust

Fortunately, there is a relatively easy solution to this issue. The Florida Constitution requires you to add specific language to your trust that gives you permission to use and possess the residence for the rest of your life. As long as you include this language, you should still benefit from the Florida homestead exemption. Speak with an experienced estate planning attorney to ensure your trust maintains the exemption benefits. If you have an out-of-state trust, you might need to amend it.

Why Put My House in a Trust, Anyway?

If you place your house in a trust, it may pass to your chosen beneficiaries more easily. This is because trust assets skip probate. Trusts also offer privacy. If you do not want your family home to be sold by your beneficiaries after you pass away for sentimental reasons, a trust could also prove effective. That said, placing your personal residence inside a trust is not always the right call.

Can an Estate Planning Attorney in Boca Raton Help Me? 

If you are considering whether or not to place your personal residence in a trust, but you are concerned about losing the homestead exemption, contact an estate planning attorney in Boca Raton. These legal professionals can explain how this process works in much more detail while assessing your unique real estate concerns. Continue this conversation with 411 Probate today.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0732/Sections/0732.401.html