The Florida homestead is exempt from your creditors during your lifetime by virtue of the homestead provision of the Florida Constitution. But, what happens after you die? Can your creditors put a lien on your homestead once you are no longer living in the house after your death? One of my clients expressed concern that their parent’s creditors would find a way to take the house because their elderly parent was hospitalized with a terminal illness.
The Florida homestead exemption protects the decedent owner after death. The decedent’s homestead is not part of the probate estate. The probate estate includes only assets that are subject to creditor claims.
Many people have asked me how to sell or transfer their parents’ homestead when all of the deceased parent’s assets were held in a revocable living trust that was set up to avoid the need for probate. The people assume that they can freely sell the homestead once they understand that the homestead is not subject to claims against their parents’ estate.
Unfortunately, the procedure is more complicated. The parents’ creditors, including unknown potential creditors, know from the public records that the deceased parent owned the house but it is not clear from the public records that they actually resided in the house as their homestead even though they may have previously applied for a homestead tax exemption. The deceased parent may have abandoned residency before death. Title companies will not insure the sale of a decedent’s homestead unless it is clear that the property is free of potential creditor claims.
As a result, children usually will have to open up a probate even through there are no probate assets when a homestead is involved. The sole purpose of the probate would be to file a petition with the court to declare the decedent’s residence to be their exempt homestead. The probate court routinely grants an order determining homestead status. This order ensures that the house is exempt from unknown claims and leads a title insurance company to issue insurance to potential buyers of the home.