The Homestead Dilemma

Should Florida homestead property be held in trust? This is a question I get several times a week. I'm going to tell you what I tell my clients when I get this question. Probably not, and here's why.

The issue of Florida homestead is very complex. Most people think of homestead as just your ad valorem tax exemption - the one where you get a discount on your Florida real property taxes and you get the Save Our Homes cap on assessment increases. If this were the only issue related to homestead, I'd say, go ahead and put the property in your trust. As long as you include the proper language to preserve your ad valorem homestead exemption you'll have no problems. But therein is a problem - you have to have the proper language or your taxing authority may deny your ad valorem homestead exemption.

But in Florida we have to make homestead more complex. In addition to ad valorem taxes there are two Constitutional provisions that make for interesting dinner conversation. One is the protection from creditors. Under the Florida Constitution your homestead property is essentially your castle. This means that as long as you own the requisite property amount both inside and outside of a municipality, your homestead is protected from the claims of creditors. This protection does not include your mortgage company so don't go getting any ideas. It also doesn't include mechanic's liens or liens from your homeowner's association, but other debts or judgments you may incur cannot attach to your homestead property.

Here's the rub. At one time there were a couple of Florida courts that didn't agree on whether you could benefit from the Constitutional protection from the claims of creditors if you put your property in a trust. One court said you maintained your protection, another one say you lost your protection. As a result, we (Randy Bryan and our attorney team at the Law Offices of Hoyt & Bryan) have not recommended putting your homestead property into your trust. If the Florida Supreme Court would decide the issue once and for all, then we would feel completely comfortable with a recommendation that was consistent with that decision. So, for now, we do not recommend putting your homestead property into your trust.

But that's not the end of the story or where it really gets complicated. There's another aspect to homestead and that's the restriction on descent and devise? What? That's the look I get from most people when I start explaining this part. Basically, Florida law says if you are married and/or have a minor child and you own your homestead in your individual name, you are not free to leave your property to anyone you want. Well how can they do that? By law. The law was intended to protect widows and minor children. The State of Florida doesn't want them to be homeless. It's this part of the homestead discussion where even most attorneys get lost.

Any attempt to leave your homestead property outside of the descent and devise restrictions is invalid. I'll give you an example. I'm a single person and I own a home in my individual name. Okay, no problem there - I can leave my property to anyone I want. Then I get married (no prenuptial agreement) and I never change the title on my home, it's still in my individual name. If I die, Florida law says the only person I can leave my home to is my spouse. Any other attempt to leave my property, say to my best friend or adult child from a previous marriage, is invalid. If I get married and have a minor child, even if I try and leave my property to my spouse, I still didn't get it right. There's a minor child so the law says my spouse gets a life estate with the remainder interest to my lineal descendants. This includes all my children, not just the minor ones. Confused yet? This is where most people's eyes glaze over in the conversation.

Then, to complicate matters even more, you've got legal professionals (attorneys) advising married people to put their homestead property into their trust - presumably so they can avoid probate. Well, if they owned their home as husband and wife (tenants by the entirety) they would avoid probate. Problem solved. Then, if the surviving spouse wants to transfer the homestead to the trust and he or she doesn't get remarried or have a minor child, then we might be able to talk. As long as they are okay with the indecision in the Florida courts regarding the protection from creditors issue.

Here's my current client situation. Husband and wife place their homestead property in a joint trust (why I dislike joint trusts is a totally different subject, so stay tuned for a different day). The joint trust has language about what happens when the first spouse dies in order to preserve the estate tax exemption. The bottom line is the devise inside the trust violates the restrictions on devise and descent. In this case, no minor kids so the spouse becomes the only valid devisee. When the devise fails, spouse gets a life estate, remainder to the lineal descendants. Okay, maybe not such a bad result - they have three kids. But...they don't want all three kids to have the property. Only one kid gets the property when mom dies because he's the one that lives with mom!

Now I'm faced with figuring out how to tell mom (and the kid who lives with her) that the last attorney who advised putting the property in the joint trust caused a violation of the restrictions on devise and descent and we have a result that that isn't going to accomplish their goals. This attempt to avoid probate is actually going to result in the necessity of a probate so we can get an Order Determining Homestead - mom get's a life estate with the remainder to the lineal descendants. Then, we have to ask each of the three kids to deed their remainder interest to mom so we can get it back in her individual name. Then, mom can decide what she wants to do - leave it to her next door neighbor or to her son as originally planned. There are a whole bunch of title related issues regarding why we want the Order Determining Homestead, but I'm not going to get into that now.

If life were simple and everyone always agreed on a particular outcome then this may just be some paperwork, attorneys fees and filing costs. However, I'm willing to bet the family didn't count on this particular outcome and since I'm the messenger with the bad news, I become the bad guy. If for some reason one or more of the children decides they don't think it's fair that the son who lives with mom gets the house, then we've got a whole bunch of additional family fun to deal with.

So what do you think, should we put homestead property in trust? I'm thinking NO - most of the time. There are exceptions, but they are few. Questions? Call Randy.

Remembering the Good Old Days

Last night I went roller skating at the Semoran Skateway. Wow! That really took me back. Back to the days when every Friday and Saturday night were spent at Skate In, our local roller rink. We thought we had challenges in those days - only then they consisted of what we were going to wear and whose mother was going to do the drop off and pick up. All the girls would eye all the guys and plan who we wanted to skate with when the turned the lights down and played a couples tune. What a great time we had.

Those times are still available. I was pleasantly surprised at how much fun you can still have at the skating rink - and it only cost $8. It wasn't overly crowded, there were plenty of rules and regulations to keep people safe and it was a pretty fun crowd. There's no drinking, smoking or gum chewing allowed so that kept it pretty tame too. Lots of families, young adults and a few couples out for a good time.

People watching is always a hoot! There were a few guys there that I think I knew from the 70's - apparently they never left. I commented to one particularly good male skater - "I'm a much better skater in my mind." He laughed and said in a few weeks I'd get my skate legs back. He said he used to skate in the 70's but when he got his driver's license he never went back - now he skates with his grand kids! Made me feel old - that's why I say I never had kids because they remind you of how old you are. He spoke the truth however, once we got our driver's license, the skating rink went by the way side. I guess we had much more important things to do then.

I was so nostalgic after my roller rink outing I called one of my best friends from the good old days - someone who could remember exactly what I was remembering. I had to laugh when she said, "You didn't really skate did you?" Of course I did and I had a great time - not to mention getting in some great exercise. My knees were killing me when I left though, just to remind me I'm not as young as I used to be. However I am happy to report I didn't fall down even though once or twice I lost my balance and didn't look very cool. I didn't have the nerve to try and backwards skate, even though my mind said I used to be pretty good at it.

If you are looking for a good time and a great nostalgic evening out - try skating! See you at the rink!

No license required

How would your life change if you could achieve all of your personal dreams and goals without having a professional license or college degree?  What if you didn't even have to have a high school education?  What if the only requirement was the visualization of your dream and a commitment to achieving it?  

Would you want to know more?  What would you be willing to invest - in time, in money, in personal sacrifice?  The interesting thing is most people will say they are willing to do whatever it takes to accomplish their dreams. The reality Is most will never even take the first step. For some they'll quit before they really get started - usually when they encounter the first challenge or obstacle. Only a few will achieve true personal and financial success.

How do you handle adversity?  Do you resolve to do more, be more and have more?  Or do you shut down and look for the next best thing believing the grass is greener somewhere else?  Do you accept responsibility for your personal success or failure?  Or, is it always someone else's fault your life is not progressing the way you want it to?

What is your daily commitment to your personal development and success?  What does your day look like moment to moment, hour by hour?  Do you get up early to work on your personal development - to read, to meditate, to plan your day?  How do you reach out in kindness to others?

How would your life change if you made $100,000 per year more than you are making today?  What if your monthly income could exceed your current annual income?  

What is your why?  The reason you get up every single day?  Does your why make you cry?  

My why is to help 100 people in my life achieve their why. I've started my list. You might even be on it. If so you'll know soon. If you are not already on my list you can be there, simply by asking. I look forward to talking to you soon.

Live long, be happy and thank everybody for everything!

Celebrate International Assistance Dogs Week August 7-13, 2011

As you know, I am co-puppy raising Sienna, a golden retriever puppy owned by New Horizons Service Dogs. As an adult, she will work as a mobility dog for an individual in a wheel chair. If you want to know more about Sienna, you can visit her personal blog, Stories by Sienna. International Assistance Dog Week (IADW) was created to recognize all the devoted, hardworking assistance dogs helping individuals mitigate their disability related limitations.

This is the week to celebrate assistance dogs everywhere. Tell your friends about International Assistance Dogs Week (IADW). The goals of IADW are to:

Recognize and honor assistance dogs
Raise awareness and educate the public about assistance dogs
Honor puppy raisers and trainers
Recognize heroic deeds performed by assistance dogs in our communities

Sienna had the chance this week to accompany me to a speaking engagement at the Orlando Humane Society. We spoke to 25 campers. They learned a lot about Sienna and what her life will be like some day. One of the most important lessons they learned is to never approach or pet a working dog without first asking permission. Everyone loves dogs and our initial inclination is to simply rush forward and pet them. Even if a dog isn't working, it is always appropriate to ask permission first. Sienna loved being with the kids and they loved meeting her.

She is teaching me so much. It is one thing to train a dog you know you plan to keep forever. It's another thing to have the responsibility to help train a dog that has to be 100% reliable. They need to be exposed to everything! Sienna is easy to train because she is smart, willing and eager to learn. She really wants to do everything right.

Thanks for your support this week and every week of service dogs everywhere!