In Florida, your home can also be a powerful estate planning tool. Thanks to Florida’s homestead exemption, many residents can shield their primary residence from creditors and limit how much of their estate is taxed.
However, to get these benefits, the home has to be set up correctly in your estate plan. Otherwise, what looks like protection could turn into a legal mess.
The Florida Constitution protects the home you live in, your “homestead,” from most creditors, even after your death. If the property qualifies, it can’t be taken to pay off things like credit card debt or civil judgments.
However, this protection doesn’t apply to every situation. Mortgages, property taxes, and certain liens, such as unpaid homeowner association dues, can still affect the property.
The exemption also gives a tax break by reducing the property’s assessed value for property tax purposes. This benefit stays in place as long as the homeowner continues to live there and claims the exemption.
Homestead protection isn’t automatic in an estate plan. One common mistake is leaving the homestead in a will without considering who inherits it. Florida law restricts who can receive the property if the homeowner is married or has minor children.
Another issue comes up when people place the home into a revocable trust. This move can be helpful if done right, but if the trust isn’t structured properly, the homestead could lose its creditor protection or run into probate complications.
While Florida doesn’t have a state estate tax, the value of your home still counts toward your federal estate. If you’ve built equity over time, you should plan ahead to help reduce the estate’s total value and preserve more for your heirs. Structuring the homestead within a trust or using enhanced life estate deeds, such as Lady Bird Deeds, are common strategies that can help.
At Schnauss Naugle Law, we help Florida residents use homestead laws as part of a smart, effective estate plan. If you want to protect your home and keep it out of court, contact us today to see how we can help.
