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Conveyance and Devise of Homestead

Author johnbsims3
Admin Male

#1 | Posted: 22 Oct 2006 06:05 
Conveyance and Devise of Homestead

Proof of the extent to which the legislature and citizens of Florida have resorted to protect the homestead from alienation, is the degree and complexity of the law surrounding the conveyance and devise of a homestead in Florida. While homestead property is subject to conveyance just as any other property is, a homestead owned individually by one spouse can be conveyed110 to a third party only if the non-owner spouse joins in the conveyance. However, use of a "straw man" to create a Tenants By Entirties (TBE) in a homestead is no longer required. A TBE can be created by the spouse holding title by: (1) conveying to the other spouse by a deed where the purpose to create a TBE is stated in the deed; or (2) by conveyance to both spouses.113 Moreover, under Florida law there is a presumption that real property taken in the name of husband and wife is held as TBE property.

Examination of the rules concerning devise of a homestead in Florida is best accomplished through the use of several hypothetical situations, including the following: (1) decedent is survived by spouse and minor children; (2) decedent is survived by spouse and adult children; (3) decedent is survived by spouse only (no lineal descendants); (4) decedent is survived by lineal descendants only; and (5) decedent is not survived by a spouse or lineal descendants. Note that these rules only apply to property held in an individual capacity. Property held as TBE property or as joint tenants with the right of survivorship will pass by operation of law to the surviving tenant at the first tenant's death (i.e., it cannot be devised).

In Situation 1 the decedent dies possessed of homestead property owned individually and is survived by a spouse and minor children. The Florida Constitution provides: "The homestead shall not be subject to devise if the owner is survived by spouse or minor child." Florida Statutes 732.4015(1) provides that a homestead is not subject to devise if the decedent is survived by a spouse or minor child. Florida Statutes 732.401(1) also provides that if the homestead is not devised (which in this case it cannot be), and the decedent is survived by a spouse and lineal descendants, the surviving spouse is entitled to a life estate in the homestead, and the lineal descendants in being at the time of the decedent's death are entitled to a vested remainder, per stirpes. As such, if the decedent owns in her individual name homestead property and is survived by a husband and minor children, she does not have the ability to devise the homestead under Florida law (to anyone, not even the surviving spouse). Her husband will be entitled to a life estate and her descendants in being at the time of her death are entitled to the remainder interest. It is also important to note that in such a case the homestead will not be subject to probate and will not be subject to the claims of creditors of the decedent's estate.

In Situation 2 the decedent dies possessed of homestead property owned individually and is survived by a spouse and adult children. The Florida Constitution provides that "the homestead may be devised to the owner's spouse if there be no minor child." Florida Statutes 732.4015(1) provides the same rule. As such, the only devise of the homestead the decedent can accomplish in this situation is to one's spouse. If the decedent chooses not to devise the homestead, the surviving spouse is entitled to a life estate and the lineal descendants of the decedent in being at the time of the decedent's death are entitled to a vested remainder, per stirpes. In either case, the homestead will not be subject to probate and will not be subject to the claims of creditors of the decedent's estate.

In Situation 3 the decedent dies possessed of homestead property owned individually and is survived only by a spouse (no lineal descendants). As in situation 2, the only devise that a testator under these facts can make is to the surviving spouse. If the testator chooses not to devise the homestead, FS 732.401(1) provides that the property is subject to the intestacy laws. As such, if the homestead is not devised, the surviving spouse is entitled to the entire fee (and would not benefit from merely a life estate). Again, in either case the homestead will not be subject to probate and will not be subject to the claims of creditors of the decedent's estate.

In Situation 4 the decedent dies possessed of homestead property owned individually and is survived only by lineal descendants. In such a situation, the testator in fact could devise the property if the lineal descendants are not minor children. If the property is devised, the devisee takes title as devised. Furthermore, if the homestead is devised to heirs listed in FS 732.103, the homestead will not be subject to the claims of creditors of the decedent's estate. If the property is not devised to heirs listed in FS 732.103, homestead property will be subject to probate and the claims of the estate. If the testator has minor children, however, the homestead is not subject to devise. If the testator is unable to devise the property or chooses not to if legally able, per FS 732.401(1) and 732.103, the lineal descendants in being at the time of the decedent's death are entitled to the homestead, per stirpes, and take as tenants in common.

In Situation 5 the decedent dies possessed of homestead property owned individually and is not survived by a spouse or lineal descendants. Under such facts the decedent is entitled to devise homestead as he or she sees fit. If the property is devised, the devisee takes title as devised and if the homestead is devised to heirs listed in FS 732.103, the homestead will not be subject to the claims of creditors of the decedent's estate. If the property is not devised to heirs listed in 732.103, homestead property will be subject to probate and the claims of the estate. If the decedent fails to devise the homestead, per FS 732.401(1), the homestead will pass in the same manner as other intestate property. If the decedent is not survived by heirs, the homestead will be subject to probate and will be available to satisfy the claims of creditors of the decedent's estate. If the decedent was survived by heirs and did not devise the homestead, it is not subject to probate or the creditors of the estate. If the decedent was survived by heirs and devised the homestead to heirs listed in FS 732.103, the homestead will not be available to satisfy the claims of creditors of the decedent's estate. If such property is not devised to heirs listed in 732.103, it is subject to probate and the claims of creditors of the estate.

What options are available, then, to a professional who owns one's homestead in his or her individual name, but is prohibited from devising the property under one of the above rules because of a surviving spouse? Divorce is one obvious option, but probably not very practical. Florida Statutes 732.702 does allow a spouse to waive his or her rights in homestead property. The statute provides that the surviving spouse's right in homestead property can be waived, wholly or partly, before or after marriage, by a writing signed by the waiving spouse in the presence of two subscribing witnesses. If the agreement is entered into after marriage, the owner-spouse must make a "fair disclosure" to the waiving spouse of his or her estate. If the agreement is entered into before marriage, no disclosure is required. No particular "consideration" is required to make the agreement binding. Another option would be to move into a new home and establish it as homestead. If the new home is homestead, the previous residence can be devised or alienated without the consent of the spouse.

One means of getting around the complex and myriad of rules outlined above is for husband and wife to own property as TBE property. Florida Statutes 732.401(2) provides that the general rules outlined above do "not apply to property that the decedent and the surviving spouse owned as tenants by the entirety." In Kinney v. Mosher, a Florida appellate court held that title to property held as TBE vests, by operation of law, in the surviving spouse upon the death of the co-owner, and, as such, is not subject to descent under the Florida Constitution or Florida Statutes controlling descent of homestead property. Similarly, in Wilson v. Florida National Bank & Trust Co. at Miami, the court held that if husband and wife acquire realty as TBE property, although the entire family lives on the property as their homestead at the death of the husband, the surviving spouse takes title to the property by right of survivorship to the exclusion of the deceased husband's heirs.

A review of the conveyancing and devise cases highlighted an important distinction between homestead property as such for creditor protection purposes and homestead property for conveyance and devise purposes. As noted above, for homestead property to be protected from creditor attachment, the property must be properly titled. We suggest that homestead property not be titled in the name of a revocable trust because at least one bankruptcy court134 has denied the homestead exemption as a result. An irrevocable trust is the key. In contrast, when dealing with homestead property in the context of descent, homestead has retained its status as such even if in trust. In Crosby v. Wartmann, the Florida Supreme Court held that where a testator devised all of his property, including his homestead, in trust to pay the income to his surviving spouse for life and remainder to his grandchildren, at the death of the surviving spouse the grandchildren took the homestead free of trust because the homestead retained its character as such and was not subject to testamentary disposition. The disparate treatment afforded homestead property in the two contexts is unfortunate and misguided. Homestead property should retain its character as such if placed in trust in the context of both creditor protection and limitations on devise.
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Conveyance and Devise of Homestead
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