How to Protect the Homestead

As an elder law attorney we are concerned with protecting the home from creditors and Medicaid estate recovery. A large portion of the analysis is set around whether the home is deemed homestead in the first place.

To determine homestead, we must ask (and answer affirmatively) four basic questions:

1. Was the real property owned by the decedent (a real/natural person)?
2. Was the decedent a Florida Resident?
3. Was the property the residence of the decedent or his family?
4. Does the property meet the size and contiguity requirements of the constitution? (1/2 acre in city; 160 acres in rural area)

If these four questions are answered affirmatively, the decedent would be exempt from a forced sale of the real estate during their lifetime. But in an elder law and estate planning context, we are concerned with how the real estate may be devised (i.e. how it transfers to someone under a Will) upon homestead owner’s death and whether the homestead exemption applies to an heir (i.e. is the real estate still protected from creditors?)

Generally, when a homestead owner dies, the subject real property is no longer homestead: an estate is not a real/natural person (see question #1 above).

BUT, Article X, Section 4(b) of the Florida Constitution (provided below) explains how the exemption from forced sale / protection from creditors “inures”(applies) to the spouse or heirs of the now-deceased owner of the real property in question. Once the decedent’s homestead descends by intestacy or devise, it may (or may not) become the homestead of that heir (F.S. §732.103) or beneficiary – with all accompanying benefits of homestead protection. But we still need to concern ourselves with how the real property will be handled in the original owner’s probate.

The decedent’s homestead property must be indicated on the probate estate inventory (FPR 5.340a). A determination of the decedent’s homestead status (homestead proceeding) should be made shortly after opening probate to determine whether the property can be devised (if so, to whom) and is it exempt from the claims of creditors?

FLORIDA CONSTITUTION PROTECTION OF HOMESTEAD | ARTICLE X; SECTION 4

(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, improve mentor repair thereof, or 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; or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family;

    (2) personal property to the value of one thousand dollars.

(b) These exemptions shall inure to the surviving spouse or heirs of the owner.

(c) The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child. The owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift and, if married,may by deed transfer the title to an estate by the entirety with the spouse. If the owner or spouse is incompetent, the method of alienation or encumbrance shall be as provided by law.

Elder Law Attorney Resources

1.      Kelley’s Homestead Paradigm Florida Bar Article + Flowchart

2.      Kelley’s Homestead Paradigm Part II

3.      How to Avoid Selling House to Qualify for Medicaid

4.       Florida Constitution, Article X, Section 4. Homestead

Different types of homestead tax exemptions in Florida.