As many Florida residents may know, the state has some unique laws when it comes to what is known in law as homestead property. While these laws are complicated and somewhat arcane, the basic idea is that a person’s primary residence, if owned, is immune to certain actions and taxes that would otherwise apply to real estate. For the purposes of estate planning, this takes the form of a state constitutional requirement that homestead property is not devisable when there is a surviving spouse or minor children.
So, what does this mean? Well, basically there are restrictions on how one can deal with homestead property in one’s will or a trust. While a comprehensive discussion of all the possible permutations is beyond the scope of this blog, attempting to leave a homestead property to a person or entity other than a surviving spouse or minor child may result in that devise being considered invalid. In such a case, the property will not go to the person or entity named as the devisee. So what happens to it?
FL Statute 732.491 governs these situations. In short, homestead property that is improperly devised will pass as if the testator died intestate, without a will, unless there are both a surviving spouse and one or more descendants of the testator. In such a case, the spouse will normally get a life estate in the property, with a vested remainder going to the descendants. What this means is that the spouse will get to live on the property for the duration of his or her life if he or she chooses to do so, and then, upon the spouse’s death, the property will pass to the children or grandchildren, the descendants, involved. However, since about 2010, there has been another possibility. The statute now allows for the surviving spouse to elect to take one-half the property as a tenant in common with the descendants. This means that the spouse has a full one-half interest in the property, and the descendants, no matter how many there are, split the other half interest in the property between them at the time of the testator’s death.
As a practical matter, this possible election can create several complexities in attempting to plan one’s estate and tax liabilities. The election of a tenancy in common could, depending on the property’s value, create an estate tax situation where one didn’t otherwise exist. Or a spouse could devise her one-half interest in the property to children from a prior or subsequent relationship. As can be seen, dealing with Florida homestead property can make estate planning a complicated affair.