Homestead Owned By Living Trust
I am frequently asked by clients who are in the process of estate planning whether they should convey their Florida homestead property to their living trust. I think it depends on the client's circumstances. If estate planning is being done for a married couple there is little practical benefit to holding a homestead property in a living trust because upon the first death the surviving spouse automatically gets a life estate. If, as in most families, the homestead is owned jointly by husband and wife, the surviving spouse gets total ownership of the homestead. The disadvantage of ownership in a trust is the possibility that a court could rule that the property does not qualify for homestead protection under Florida law. The Florida constitution protects homestead property owned by a natural person. One bankruptcy case held that a living trust is not a natural person, and therefore, the property owned by the trustee of a living trust is not protected from creditors. Other courts have reached the opposite conclusion.
For single people with no minor children, the Florida homestead laws permit devise of the homestead to anyone the owner chooses. In that case, there may be estate planning advantages to having the homestead owned by a living trust because devise of the homestead is not controlled by the Florida constitution. Single people who are retired should not be concerned with asset protection if they have adequate liability coverage. For these people, estate planning has become more important at their stage of life than is asset protection, and I often recommend titling the homestead in their living trust.
