Can an Irrevocable Trust Own Homestead Property?
I received an email asking whether the homestead provisions of the Florida Constitution would protect a residence owned by an irrevocable trust where the debtor had deeded a house into the trust and remained the trustee and one of the beneficiaries. The Constitution protects residences owned by natural persons. Previous blog posts discussed whether a homestead can be owned by a revocable living trust, or whether conveyance to a living trust forfeits homestead protection. Although there is a case which denies homestead protection to a property owned by a living trust, most courts have protected a residence in a living trust.
A living trust is closer to a "natural person" than is an irrevocable trust. One key factor which makes a living trust created for estate planning equal to ownership by a natural person is the settlor's retained rights to revoke or amend the trust. Transfer to a living trust is not deemed to be a completed gift to the trust beneficiaries whether they be the settlor himself or other family members. A irrevocable trust, by its name and nature, is a completed gift to beneficiaries; the trust can not be undone and the settlor, for the most part, cannot amend the trust agreement. Even where the settlor resides in the trust property and is the sole beneficiary of the irrevocable trust, property ownership by an irrevocable trust is more easily distinguishable from ownership by a natural person than is property ownership in a revocable living trust.
In my opinion, owning a residence by a living trust should not undermine homestead protection. I suspect that a court would not afford homestead protection to an irrevocable trust, even if the settlor lives in the property and is the sole trust beneficiary.
posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida
Trying to find statute which states that JTWROS by registered deed is an entitlement of 100% Homestead exemption. According to Homestead office this was afforded about 1995.
Thank you.
I am filling out forms for a revocable trust, the instructions tell me I have to change the name on the deed from Mxxxa Cxxxxe to Mxxxxa Cxxxxe revocable trust. In the trust I am naming myself as trustee and in the event of my death the succesor will be Sxxxa Wxxxxxn.
If I decide to change the title of the deed and change it to Mxxxxa Cxxxxxe revocable trust do I loose my homestead exception?
While the Trust states I am the trustee and at my death the successor will be the trustee am I putting the successor on the title when I change it to Mxxa Cxxxxxe revocable trust?
what are the fees involved if I wanted to change the deed from Mxxxxxa Cxxxxe to Mxxxa Cxxxe revocable trust?
While I am still alive and decide to sell the property after the revocable trust is in place do I have to have permission from the successor to sell the property?
My instruction are not really clear, I want to prepare, for the just in case scenario but I don't want to add someone to the deed before my passing... I am using the portfolio will and trust kit cd from Suse Orman, its pretty popular, FYI just in case you have had other people doing the same process I want to be clear before I make any changes.
Anyone know the last FL Supreme Court case which protected the homestead rights of a home owned in the revocable living trust name (or in the name of the trustee of the revocable living trust) against a potential creditor in FL? All I have seen is: Engelke v. Estate of Engelke