Source: http://flprobateresource.lexblognetwork.com/articles/new-probate-cases/homestead-litigation/
Timestamp: 2018-01-18 23:23:55
Document Index: 797296032

Matched Legal Cases: ['§4', '§4', '§6', '§ 4', '§ 6', '§ 4', '§ 4', '§ 4', '§ 731', '§ 733', '§ 733', '§ 4', '§ 731', '§ 732']

Homestead Litigation : The Florida Probate Litigation Blog [Redev]
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Florida Homestead Descent Examples
Kristen D. Drake, JD, CFP, publishes Coast Law, LLC, an excellent Florida-specific blog focusing on estate planning matters. Her goal is to is to build a "One-Stop Florida Homestead reference page," and she's off to a great start. For example, in her blog post entitled Homestead Descent Examples she provides a link to homestead-related case studies prepared by Bruce Stone, one of Florida's most well regarded estate planning attorneys. Here's the post in its entirety:
Sometimes the best way to understand a complicated issue is with examples. Bruce Stone, a prominent estate planning attorney in Florida (more about Mr. Stone here), presented "What Every Georgia Trusts and Estates Practitioner Needs To Know About Florida Law" and included some excellent homestead descent examples in his materials. He was kind enough to let us post them here. Test your knowledge of homestead descent with these great examples.
Posted on July 22, 2007 by Juan Antunez
The undisputed facts, which were before the trial court, are as follows. Mr. and Mrs. Maness were married on June 14, 1986. Sometime in September 1986, Mr. Maness purchased a vacant lot located at 180 Ana Court, Marathon, Monroe County, Florida, which was titled solely in the name of “James G. Maness, as a married man” (“Marathon Property”). . . . . On or about September 25, 2002, Mr. Maness, as the seller, and the Taylors, as the purchasers, entered into a contract, whereby Mr. Maness agreed to convey the Marathon Property to the Taylors. Mrs. Maness did not execute the contract, nor was she named in the contract. Closing was to take place on or before December 2, 2002. Mrs. Maness, however, refused to execute the deed transferring the Marathon Property to the Taylors, claiming that she has a homestead interest in the Marathon Property, thereby precluding consummation of the contract.
In reaching our conclusion, we wish to address Mrs. Maness' homestead interest in the Marathon Property. The Taylors correctly point out that Mrs. Maness is not the title owner of the Marathon Property. However, the individual claiming the homestead exemption need not hold fee simple title to the property. Callava v. Feinberg, 864 So.2d 429, 431 (Fla. 3d DCA 2003). Article X, section 4 “does not designate how title to the property is to be held and it does not limit the estate that must be owned, i.e., fee simple, life estate, or some lesser interest.” Stilwell, 810 So.2d at 569. Thus, even if Mrs. Maness owns only a beneficial interest in the Marathon Property, she is entitled to claim a homestead exemption to the forced sale of the property. See Callava, 864 So.2d at 431 (holding that even if divorced wife only owned a beneficial interest and not title interest in the residence constituting her homestead, she was nonetheless entitled to claim a homestead exemption from the forced sale of the property).
Former U.S. Secretary of Defense Donald Rumsfeld once famously said that it was the "unknown unknowns" that worried him most (see here for the You Tube version). In litigation involving homestead real property, simply reading the deed tells you very little about the principal issue driving the case. Knowing this unstated fact in advance may make all the difference in the world. If your opponent is unaware of this fact, he or she is about to learn why the "unknown unknowns" are the scariest part of practicing law.
Posted on July 7, 2007 by Juan Antunez
[T]he Florida Supreme Court has expressly held that “[t]he transfer of nonexempt assets into an exempt homestead with the intent to hinder, delay, or defraud creditors is not one of the three exceptions to the homestead exemption provided for in article X, section 4.” Havoco of Am., Ltd. v. Hill, 790 So.2d 1018, 1028 (Fla.2001) ( “Havoco I” ) (emphasis added); Havoco of Am., Ltd. v. Hill, 255 F.3d 1321, 1322 (11th Cir.2001) ( “Havoco II” ) (affirming that judgment debtor's purchase of home with intent to hinder creditors did not overcome homestead exemption, based on answer to certified question in Havoco I ). This is precisely what Plaintiff is alleging Defendants sought to accomplish by purchasing the Florida residence. For this reason, Plaintiff's claim fails.
Part II: Can a co-op be homestead property?
Posted on June 5, 2007 by Juan Antunez
In a comment posted here in connection with Phillips v. Hirshon (a recent 3d DCA opinion holding that a cooperative apartment may not be considered homestead property for the purpose of subjecting it to Florida Statutes regulating the descent of homestead property), Bradenton attorney Jeffrey S. Goethe discussed a case where he successfully argued that Florida's homestead creditor protections apply to cooperative apartments. The key to possibly reconciling these two divergent results is to recognize the divergent lines of case law that has evolved with respect to each of the three distinct facets of homestead law addressed in Florida's constitution:
Article X, §4(c) for devise and descent
Article X, §4(a) and (b) for exemption from forced sale
Article VII, §6 for taxation
In a follow up to his comments, Jeff was kind enough to share a copy of the 11-page legal memorandum he filed in his case and agreed I could post it on the blog for the benefit of others (see here for copy).
Posted on May 6, 2007 by Juan Antunez
Phillips v. Hirshon, --- So.2d ----, 2007 WL 1263475 (Fla. 3d DCA May 02, 2007)
Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child,” is one of the few "forced heirship" rules applicable under Florida law (the only other example of significance would be Florida's spousal elective share rules). These rules provide an opportunity to challenge a will that is exponentially easier than traditional grounds for challenging a will in Florida (see here).
Children challenge dad's devise to girlfriend on homestead-law grounds
In this case dad devised a life estate in his Key Biscayne penthouse to his girlfriend. One of his two surviving sons was a minor, so they challenged this devise by arguing that the property was homestead property. Here's how the 3d DCA summarized their argument:
After their father's death, Joseph and David filed separate petitions to determine homestead. The thrust of their argument to the trial court was that the co-op was homestead property in the hands of their father at the time of his death and therefore not subject to devise by him under Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child.” The brothers contend that because David was a minor, the bequest under the will fails and the property passes outside of the estate, and therefore, the brothers now share the father's interest in the co-op on an equal basis as a matter of law.
Court says NO to homestead status for co-op
The trial court didn't buy this argument, and neither did the 3d DCA based on a conflicting Florida Supreme Court opinion. However, the 3d DCA made clear that it felt the sons should have prevailed, and took the extra step of certifiying the issue to the Florida Supreme Court for reconsideration. Here's ow the 3d DCA summarized its holding:
Bankruptcy court says NO to equitable lien on homestead property
Posted on March 21, 2007 by Juan Antunez
The one crack in the almost impenetrable fortress protecting Florida homestead property from creditors is the amorphous "equitable lien" doctrine. There isn't a lot of case law out there on equitable liens against Florida homestead, so In re Gosman, 2007 WL 707365 (Bankr.S.D.Fla. Mar 05, 2007) should be of interest to anyone whose practice involves homestead issues.
In this case the bankruptcy court said NO to a creditor seeking to impose an equitable lien on $22.5 million in net sales proceeds generated by the sale of former health care executive Abe Gosman's Palm Beach mansion. The court articulated the following two-part test for determining "the very narrow circumstances warranting the imposition of an equitable lien" on homestead property under Florida law:
that the money obtained was utilized to invest in, purchase or improve the homestead. The Court finds that neither of the two prongs has been satisfied.
Here's how the bankruptcy court summarized Florida's equitable lien case law:
The Florida homestead exemption is construed liberally and the three exceptions to the Florida homestead exemption are construed narrowly and strictly. Havoco of America. Ltd. v. Hill, 790 So.2d 1018 (Fla.2001). A limited legal basis has been established for imposing an equitable lien on homestead. The first case from the Florida Supreme Court to impose an equitable lien determined that the imposition of a lien was proper due to the embezzlement of funds by an employee who, in turn, used the funds to make improvements to the home. Jones v. Carpenter, 106 So. 127 (Fla.1925). The Court in Jones elaborated that if the money had been obtained through a valid contract and then utilized to make home improvements, the imposition of an equitable lien would not be appropriate. Id. In Palm Beach Savings & Loan Association, F .S.A v. Fishbein, 619 So.2d 267 (Fla.1993), the Florida Supreme Court allowed an equitable lien against homestead property wherein monies were obtained fraudulently by use of a forged mortgage instrument and then utilized to satisfy a valid mortgage. In Chauncey v. Dzikowski, 454 F.3d 1292 (11 Cir.2006), the Eleventh Circuit Court of Appeals referenced the standard for imposing an equitable lien by stating that it may be necessary to reach beyond the literal language of the Florida homestead exemption to invoke an equitable lien against homestead property when funds were obtained through fraud or egregious conduct and utilized to invest in, purchase, or improve the homestead. Id. at 1294.
Good news from the bankruptcy front: homestead in a revocable trust remains protected
Posted on March 14, 2007 by Juan Antunez
I previously wrote here about Engelke v. Estate of Engelke, a 4th DCA opinion holding that homestead held in a revocable trust remained exempt from forced sale or lien by judgment creditors pursuant to Article X, Section 4(a) of the Florida Constitution. The reason why opinions like Engelke are especially interesting for estate planners is because they chip away at the precedential value of In re Bosonetto, 271 B.R. 403 (Bankr.M.D.Fla.2001), a Middle District Bankruptcy Court opinion ruling that homestead property in a revocable trust lost its creditor protection. Bosonetto has been the subject of heavy criticism every since.
We now have two new Middle District Bankruptcy Court opinions expressly refusing to follow Bosonetto: In re Alexander, 346 B.R. 546, 19 Fla. L. Weekly Fed. B 356 (Bankr.M.D.Fla. Jul 25, 2006), and In re Edwards, --- B.R. ----, 2006 WL 3788803 (Bankr.M.D.Fla. Oct 04, 2006).
This is good news for planners, although the issue is not yet dead. Bosonetto hasn't been overruled. Until it is, planners should remain cautious. The following excerpts from Edwards summarize the well-reasoned analyses underlying both opinions:
The issue for determination is whether real property in which a debtor resides qualifies for the Florida homestead exemption when title to the property is held by a revocable trust. The issue is governed by Florida state statutory and case law. Florida opted out of the federal bankruptcy exemption scheme and a debtor filing for bankruptcy protection in Florida must use Florida's state law exemptions. The Florida exemptions include a homestead exemption found at Florida Constitution, Article X, Section 4(a)(1):
(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:
(1) a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner's consent by reason of subsequent inclusion in a municipality; upon which the exemption shall be limited to the residence of the owner or the owner's family.
Fla. Const. Art. X, § 4 (emphasis added).
The Trustee relies on the decision In re Bosonetto, 271 B.R. 403 (Bankr.M.D.Fla.2001) in which the Bankruptcy Court held a debtor may not claim real property owned by a trust as exempt homestead property. The great weight of the relevant case law holds to the contrary. Fee simple title of the property is not required, and an equitable or legal interest should afford protection pursuant to the provision.
The Florida Appellate Court ruled in Engelke v. Estate of Engelke, 921 So.2d 693, 696 (Fla. 4th DCA 2004) a revocable trust was constitutionally protected homestead property and could not be used to pay claims and expenses of the grantor's estate. The grantor of the trust retained an ownership interest in the property since the trust was revocable. The trust, due to its revocable nature, was owned by a “natural person” within the meaning of the Florida homestead exemption. The revocable trust only held title to the property, while the grantor retained ownership.
A recent case decided in the Middle District of Florida, In re Alexander, 346 B.R. 546 (Bankr.M.D.Fla.2006) is in agreement holding fee simple title to the property is not necessary to qualify for the homestead exemption. “... [I]n order to claim property in which the individual resides as exempt it is sufficient that: (1) the individual have a legal or equitable interest which gives the individual the legal right to use and possess the property as a residence; (2) the individual have the intention to make the property his or her homestead; and (3) the individual actually maintain the property as his or her principal residence.” The Bankruptcy Court ruled homestead property titled in a revocable trust can be exempt from a debtor's bankruptcy estate in a Chapter 7 case.
Another estate plan hits the dust: testator's personal property right's lose out to heir's homestead rights
Cutler v. Cutler, --- So.2d ----, 2007 WL 601866 (Fla. 3d DCA Feb 28, 2007)
Homestead is known as Florida’s legal chameleon because it has different meanings depending upon its context. Here's how the 3d DCA described the three faces of Florida's homestead law in the linked-to opinion:
As the Florida Supreme Court noted in Snyder v. Davis, 699 So.2d 999, 1001-02 (Fla.1997), there are three kinds of homestead with one purpose: preserving the family home for its owner and heirs. The first kind, unrelated to this case, provides homestead with an exemption from taxes. See Art. VII, § 6, Fla. Const. The second protects homestead from forced sale by creditors. Art. X, §§ 4(a)-(b), Fla. Const. The third delineates the restrictions a homestead owner faces when attempting to alienate or devise homestead property. Art. X, § 4(c), Fla. Const.
This case is another example of homestead law derailing a Florida testator's estate plan. All parties conceded that the homestead property at issue was "freely devisable" under Florida law, and yet the testator's intent was still frustrated by Florida's homestead law.
The estate plan at issue was simple: mom, whose only surviving family was her adult son and daughter, specifically devised 2 pieces of real estate, her home to her daughter and an adjacent vacant lot to her son. In the event the administrative expenses of her estate exceeded her residuary estate, mom wanted the remaining expenses to be shared equally by son and daughter. Here's how the 3d DCA described mom's plan:
Edith's [estate] plan [was] that if other available assets are insufficient to satisfy her creditors' claims and the final expenses of her estate upon her death, the residence she devised to Cynthia and the adjacent vacant parcel she devised to her son Edward will abate equally to satisfy those expenses.
Daughter objected to apportioning any probate expenses to her devise of freely-devisable homestead property and the trial court agreed pursuant to the “inuring clause” of Article X, section 4(b) of the Florida Constitution, effectively frustrating mom's clearly expressed testamentary intent. The following excerpts from the linked-to opinion provide a good summary of the 3d DCA's rationale for upholding the trial court's ruling:
The specific homestead protection at issue in this case is protection against forced transfer for use by an estate after the death of a decedent. Art. X, § 4(b), Fla. Const. To clearly distinguish this particular protection in the Florida Probate Code from other forms of homestead, the Legislature has denominated it as “protected homestead.” See § 731.201(29), Fla. Stat. (2003)(defining “protected homestead as “[that] property described in s. 4(a)(1), Art. X of the State Constitution on which at the death of the owner the exemption inures to the owner's surviving spouse or heirs under s. 4(b), Art X of the State Constitution”).
Here, we are confronted with two specific devises of property, which, in the general residuary clause of her will, Edith directed should be contingently available to her personal representative, if necessary, to pay the expenses of her estate. See Park Lake Presbyterian Church v. Estate of Henry, 106 So.2d 215, 217 (Fla.1958)(defining a specific devise as “a gift of a particular thing or of a specified part of a testator's estate so described as being capable of distinguishment from all others of the same kind,” and defining a residuary legacy as “a general legacy wherein fall all the assets of the estate after all other legacies have been satisfied and all charges, debts, and costs have been paid”). On their face, these two specific devises appear equal in dignity. But upon closer examination, it is clear that they are not. In the case of the specific devise of the vacant land to Edward, there is no question but that Edith had the legal right to subject this devise to the debts of the estate if she so desired. § 733.805(1) Fla. Stat. (2004)(“Funds or property designated by the will shall be used to pay debts [of the estate] ... to the extent the funds or property is sufficient.”); In re Estate of Potter, 469 So.2d 957, 959 (Fla. 4th DCA 1985). However, as we have learned, the devise to Cynthia was followed by a constitutional exemption from forced sale of her devise to satisfy the expenses of Edith's estate. This constitutionally created benefit is personal to Cynthia, and hers to assert. For reasons of her own, she has determined to do so. We do not consider ourselves liberated to deny her this constitutional benefit.
The lesson to be drawn from this case is that the creditor protection aspects of even freely-devisable homestead property will trump all other interests -- including a testator's individual property rights in his or her own home. This point is made by the Judge Schwartz in his dissent:
The ground of my dissent is aptly stated in the appellant's brief:
When there is no surviving spouse or minor child, as in this case, the decedent's homestead may be freely transferred, gifted, or devised without limitation. Art. X, Section 4(c), Fla. Const.; City National Bank of Fla. v. Tescher, 578 So.2d 701, 703 (Fla.1991). ... If Mrs. Cutler could have left her properties to someone outside of her family, which she could have done, why could she not leave it to her heirs with the provision that the properties be available to satisfy her debts? The answer to this question is simple-she was lawfully entitled to do so.
See also DeMayo v. Chames, 934 So.2d 548, 551 (Fla. 3d DCA 2006) (Shepherd, J., concurring) (persuasively stating view that property owner should have authority to deal with homestead property as she sees fit), review granted, 937 So.2d 122 (Fla. 2006).FN6
FN6. I hope, without confidence, that the majority is not saying that the limitation on the devise would have been okay if it were contained in the same sentence or paragraph as a condition of the devise, but it is not and the testatrix's clearly expressed wishes must be frustrated because it is in a separate provision of the will. If my hope is unjustified, as I write I can hear workers installing the words-in Gothic letters, of course-“All common sense abandon, ye who enter here” over the doors to our courtroom.
I am sympathetic to Judge Schwartz's position, as I previously stated here.
Posted on April 7, 2006 by Juan Antunez
I previously wrote here about the Third DCA's initial ruling in this case enforcing a charging lien against the debtor's homestead property based on a written waiver. On its own motion the Third DCA subsequently reconsidered the case en banc and then completely reversed itself!
According to this Third DCA opinion even if a person knowingly waives his or her homestead protection against forced sale, such waiver is not enforceable unless it falls within one of exceptions specified in Article X, section 4 of Florida's constitution, which provides in relevant part as follows:
Homestead; exemptions.-- (a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person.... (Emphasis added.)
The Third DCA was apparently uncomfortable with this outcome, but felt it had no choice under binding Florida Supreme Court precedent.
[Carter's Administrators v. Carter, 20 Fla. 558, 570 (1884)] and [Sherbill v. Miller Mfg. Co., 89 So.2d 28, 31 (Fla.1956)] confirm that Article X, section 4 "protects the homestead against every type of claim and judgment except those specifically mentioned in the constitutional provision itself" and that other than for the purposes stated in this provision, cannot be waived. . . . Because the attempted waiver in this case is unrelated to those purposes stated in Article X, section 4, it is invalid.
Perhaps recognizing the unfairness of the outcome in this case, the Third DCA took the extraordinary step of essentially asking the Florida Supreme Court to overrule itself. More specifically, the Third DCA certified the following question to the Florida Supreme Court as a matter of great public importance:
WHETHER, IN LIGHT OF SUBSEQUENT PRECEDENT IN FLORIDA AND OTHER JURISDICTIONS, AND THE TEXTUAL CHANGES MADE BY THE PEOPLE OF THE STATE OF FLORIDA IN ARTICLE X, SECTION 4 OF THE FLORIDA CONSTITUTION IN THE GENERAL ELECTION OF NOVEMBER 1984, THE HOLDING IN CARTER'S ADM'RS v. CARTER, 20 Fla. 558 (1884), FOLLOWED IN SHERBILL v. MILLER MFG. CO., 89 So.2d 28 (Fla.1956), THAT A WAIVER OF THE BENEFIT AND PROTECTION OF THE EXEMPTION FOUND IN ARTICLE X, SECTION 4(A) OF THE FLORIDA CONSTITUTION IS UNENFORECEABLE AGAINST THE CLAIM OF A GENERAL CREDITOR, SHOULD BE OVERRULED?
Yes, It's Safe to Put Homestead Property in a Revocable Trust
Posted on February 17, 2006 by Juan Antunez
Engelke v. Estate of Engelke, __ So.2d __ (Fla. 4th DCA February 8, 2006)
Navigating Florida's homestead-protection laws is one of the primary focus points for estate planning attorneys in this state. There were two Florida Supreme Court opinions in 2005 alone attempting to unravel the thorny probate issues inherent to Florida homestead properties (see here and here).
In this case the 4th DCA addressed one of the most common questions faced by Florida estate planning attorneys: should the homestead property be put into the client's revocable trust? According to the 4th DCA, the answer is an unqualified YES. There has been hesitation in the past to put homestead property into a revocable trust because of an unfortunate Florida bankruptcy-court opinion that stood for the proposition that homestead property in a revocable trust was not owned by a "natural person," thus it lost its creditor protection. As far as I know, every published Florida opinion addressing the same issue since then has ruled the other way. The 4th DCA case linked-to above does the same, directly answering two key estate-planning questions as follows:
"We note that in this case while [the decedent's] residence was held in a revocable trust, it was owned by a "natural person" for purposes of the constitutional homestead exemption. Because [the decedent] retained a right of revocation, he was free to revoke the trust at any point in time. Accordingly, he maintained an ownership interest in his residence, even though a revocable trust held title to the property. We therefore conclude that [the decedent's] interest as beneficiary of his own revocable trust would entitle him to constitutional homestead protections." (Emphasis added.)
Frequently, as here, the trust contains provisions regarding the payment of expenses of the estate after the settlor's death. We have found no case in which a general direction to pay the estate expenses has trumped the constitutional homestead protections which are the rights of the heirs as much as the decedent. Because revocable trusts are merely will-substitute devices, we see no reason why the reasoning of Thompson v. Laney, precluding use of the homestead to satisfy estate debts, should not apply with equal force when homestead property is transferred through a revocable trust. Therefore, unless the trust specifically directs that the freely devisable homestead be sold, the rights of the heirs attach at the death of decedent, and the property is protected from the claims of all creditors." (Emphasis added.)
Florida Supreme Court on Freely Devisable Homestead Property
Posted on January 23, 2006 by Juan Antunez
McEnderfer v. Keefe, 2006 WL 129320 (Fla. Jan 19, 2006)
In 2005 I wrote here about the Florida Supreme Court's decision in Warburton construing Florida's homestead laws as applicable to otherwise freely devisable homestead property. This was a companion case to the 2005 decision, and the Court merely restates its earlier position.
This Court recently quashed Warburton and answered the certified question in the negative. We therefore answer the certified question in this case in the negative and hold that where a decedent is not survived by a spouse or minor children, the decedent's homestead property passes to the residuary devisees, not the general devisees, unless there is a specific testamentary disposition ordering the property to be sold and the proceeds made a part of the general estate. See McKean v. Warburton, 30 Fla. L. Weekly S613, --- So.2d ----, 2005 WL 2155180 (Fla. Sept. 8, 2005).
The following briefs were filed with the Court in this case:
Can a Personal Representative Sell Freely Devisable Homestead Property?
Posted on November 10, 2005 by Juan Antunez
Harrell v. Snyder, 2005 WL 2899461 (Fla. 5th DCA Nov. 4, 2005)
In this case, the decedent had divorced his wife several years before his death, but never got around to changing his will. So when he died, his ex-wife became personal representative of his estate under the terms of his last will (although she was deemed to have predeceased him for purposes of the will's dispositive provisions). The decedent was not survived by any minor children and had not remarried prior to death, so his homestead property was freely devisable . . . or was it?
Brevard County Judge Kerry I. Evander ruled that the personal representative had the authority to both take control of the freely-devisable homestead property and to sell it. The Fifth DCA disagreed, holding as follows:
Under F.S. § 733.608(2), a trial court MAY authorize a personal representative to take possession of homestead property to preserve it for the heirs.
This same statute does NOT grant to a personal representative the power to sell such property.
Bottom line, in the absence of specific instructions authorizing the personal representative to sell freely-devisable homestead property, such property passes to the residuary beneficiaries of the decedent's estate. In an opinion I wrote about here, the Florida Supreme Court provided the following directive regarding the sale of freely-devisable homestead property:
We therefore . . . hold that where a decedent is not survived by a spouse or minor children, the decedent's homestead property passes to the residuary devisees, not the general devisees, unless there is a specific testamentary disposition ordering the property to be sold and the proceeds made a part of the general estate.
FLORIDA SUPREME COURT ON HOMESTEAD PROPERTY
Posted on September 11, 2005 by Juan Antunez
McKean v. Warburton, 2005 WL 2155180 (Fla. September 8, 2005) (4th DCA Reversed)
REVISED OPINION: McKean v. Warburton, 2005 WL 3601898 (Fla. September 8, 2005)
The Florida Supreme Court reversed this Fourth DCA decision permitting the distribution of freely devisable homestead property to satisfy a preresiduary bequest. For the reasons discussed here, I think the Florida Supreme Court got this one wrong, turning what should be a benefit, i.e., Florida's homestead protection laws, into one very big trap for the unwary.
In light of skyrocketing real estate values in Florida, for most Florida homeowners, their single most valuable asset is their home. If a homeowner is survived by a spouse or minor children, his or her residence is protected homestead property under Florida's Constitution (Art. X, § 4(c)) and Probate Code (F.S. § 731.201(29)), and thus not subject to devise pursuant to F.S. § 732.4015. However, if the homeowner's residence is NOT protected homestead property, one might be forgiven for assuming that the residence was "freely" devisable.
Not so fast says the Florida Supreme Court. If a homeowner that expects NOT to be survived by a spouse or minor children wants to make sure that his or her single most valuable asset at death can be used to satisfy pre-residuary bequests, the Florida Supreme Court's holding in this case will require that the homeowner specifically provide in his or her Will that the homestead property be sold and added to the general probate estate. Specifically, the Florida Supreme Court summed up its holding in this case as follows:
The following appellate briefs were filed with the Florida Supreme Court for this case:
Brief of Real Property Probate & Trust Law Section of The Florida Bar, as Amicus Curiae
DCAs in conflict . . . can freely devisable homestead property be used to satisfy pre-residuary bequests? Fourth DCA says YES, Second DCA says NO, Florida Supreme Court ruling awaited
Posted on May 4, 2005 by Juan Antunez
Estate of Mahaney v. Keefe, 2005 WL 924264 (Fla. 2 DCA April 22, 2005) (Trial Court Affirmed)
It is not uncommon for a person's single largest asset at death to be his homestead property. This is exactly what happened in the just decided Second DCA case, Estate of Mahaney v. Keefe (other than her home, decedent owned no other property of any value), and in the Fourth DCA case decided last year, Warburton v. McKean, 29 Fla. L. Weekly D1411 (June 9, 2004) (other than a condominium sold for $141,000, the decedent's estate consisted of only nominal assets valued at $10,000).
The question faced by both courts was whether freely-devisable homestead property could be used to satisfy pre-residuary bequests. The Fourth DCA said yes, the Second DCA said no. My understanding is that the Warburton case was heard by the Florida Supreme Court in early 2005, so we should have some resolution to this conflict in the near future. For the record, based on the basic principal that "freely devisable" homestead property should be controlled by a person's will just like any other freely devisable asset, and the 1991 Florida Supreme Court ruling in City Nat'l Bank of Fla. v. Tescher, I think the Fourth DCA got it right in Warburton.