Don’t lose your homestead with these mistakes

Typically property on which you live and intend as your primary residence, whether devised in a will or not, passes outside of probate. That means that most creditors, other those with a mortgage on the property, cannot force a sale of the home. However there are mistakes people make that unknowingly forfeit the protection afforded by the homestead exemptions.

What is homestead?

Typically if a person owns a home and resides there at the time of his death (or has an intention to return to even if in a nursing home or residential facility,) then that home is exempted from the probate process.

What are conditions to qualify for homestead?

It must be your primary residence, and it cannot be a future residence or a second home.

How is your home protected?

Except for your mortgage creditors, your home is protected from other creditors who might attempt to force a sale of your home to collect a debt.  The Florida Constitution provides protection from a forced sale except for payments owing for unpaid taxes, assessments, obligations as to the purchase, improvement or repair thereon, or obligations contracted for house, field or other labor performed on the realty.

The most common ways to lose homestead protection:

  1. If your will directs the personal representative to sell the home after your death. Typically a personal representative does not have authority to sell homestead property in probate. Personal representatives have no jurisdiction over nor title to the homestead, and it is not considered an asset of the estate.
  2. If you retitle your homestead and put it in the name of an irrevocable trust. The Homestead protection under the Constitution does not protect properties owned by entities. A revocable trust cannot qualify for homestead protection.
  3. If you put another person such as an adult child or other relative on the deed (other than in life estate or lady bird deed) and the other person does not reside in the home, that person is not entitled to homestead protection. A judgment creditor of the adult child can levy on that person’s ownership and force a sale of the home.
  4. If your rent out your home, it becomes an income producing asset and is no longer your primary residence.

For more information on how to protect your homestead exemption, call to be a part of our free estate planning workshop.