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Inter Vivos Trusts and Homestead AGO 90-70

Author johnbsims3
Admin 

#1 - Posted: 31 Dec 2006 14:18 
Number: AGO 90-70
Date: August 22, 1990
Subject: Homestead tax exemption
Mr. George Ralph Miller
Attorney for the Property
Appraiser of Walton County
Post Office Box 687
DeFuniak Springs, Florida 32433

RE: PROPERTY APPRAISERS--TAXATION--HOMESTEAD EXEMPTION--
trust beneficiary with present possessory life
interest in real property who makes property his
permanent home entitled to homestead tax exemption.

Dear Mr. Miller:

You have asked on behalf of the Property Appraiser's Office
of Walton County substantially the following question:

Is the property appraiser authorized to allow a homestead
tax exemption pursuant to s. 6, Art. VII, State Const., on
a home placed in an inter vivos trust by one who is a co-
beneficiary of the trust and who resides on the property?

In sum, I am of the opinion that:

Because the trust in question grants the beneficiary a
present possessory interest for life, and the beneficiary
makes the real estate comprising the corpus of the trust
his permanent home, a sufficient equitable title to real
estate is established to support the allowance of a home-
stead tax exemption.

According to your letter, the following are provisions of
the trust: (1) The settlor and settlor's wife, for as long
as at least one of them is living, shall have the continuous
present right to full use, occupancy and possession of the
homestead; and (2) The trustee shall have no power,
authority or duty with respect to the homestead until such
time as the settlor otherwise directs in writing, revokes
this trust agreement, or settlor and settlor's wife are
both deceased, whichever shall first occur.

I understand from your letter that the beneficiary of the
intervivos trust makes his permanent residence on the
property and has a present possessory interest for life,
with legal title being in the trustee.

Under the Constitution of the State of Florida, a homestead
exemption is granted to "[e]very person who has the legal
or equitable title to real estate and maintains thereon the
permanent residence of the owner, or another legally or
naturally dependent upon the owner . . . ."[1] This
constitutional provision states that "[t]he real estate
may be held by legal or equitable title, by the entireties,
jointly, [o]r in common . . . ."

Based on the information you have provided it appears that
the beneficiary does not have legal title, and will, there-
fore, be entitled to the homestead exemption only if he has
equitable title to the real estate.

Section 196.041(2), F.S., provides that:

A person who otherwise qualifies by the required residence
for the homestead tax exemption provided in s. 196.031
shall be entitled to such exemption where his possessory
right in such real property is based upon an instrument
granting to him a beneficial interest for his life, such
interest being hereby declared to be "equitable title to
real estate," as that term is employed is s. 6, Art. VII of
the State Constitution; and such person shall be entitled
to the homestead tax exemption irrespective of whether such
interest was created prior or subsequent to the effective
date of this act.

Thus, the Legislature has declared that a possessory right
in real property granted to a beneficiary for his life shall
be equivalent to "equitable title to real estate."2 The
courts have recognized that the Legislature has the "pre-
rogative to classify property for the purpose of taxation,
so long as the classification is based upon some reasonable
distinction rationally related to the purpose for which the
statute was enacted, and so long as it does not conflict
with any provision of the state or federal constitution."[3]

In addition, the courts of this state have recognized that
the homestead exemption is to be construed liberally for the
benefit of those whom it is designed to protect.[4]

Inasmuch as the beneficiary resides on the property and has
a possessory right in such real property based upon the
trust instrument which grants him such beneficial interest
for his life, the beneficiary, pursuant to s. 196.041(2),
F.S., is considered to have "equitable title to real
estate," and, having complied with all the requirements of
s. 6, Art. VII, State Const., is entitled to the homestead
tax exemption.

Sincerely,



Robert A. Butterworth
Attorney General

RAB/tcs
-------------------------------------------------- ---------------

[1] Section 6(a), Art. VII, State Const. See also, s. 6(d),
Art. VII, State Const., and s. 196.031(3)(d) and (e), F.S.,
which increase the homestead exemption from $5,000 to
$25,000.

[2] Compare, AGO's 76-204, 74-313, 72-12, 56-271 and 55-78,
reaching the conclusion, prior to the adoption of
Ch. 78-324, Laws of Florida, that the interest of the bene-
ficiary for ad valorem tax purposes was intangible personal
property unless the trust was a passive or dry trust. To
the extent of any conflict, this opinion supersedes those
opinions.

[3] Miller v. Higgs, 468 So.2d 371, 377 (1 D.C.A. Fla.,
1985), rev. denied, 479 So.2d 117 (Fla. 1985).

[4] Drucker v. Rosenstein, 19 Fla. 191 (1882); Cain v. Cain,
549 So.2d 1161 (4 D.C.A. Fla., 1989)

Asset Protection and Estate Planning Florida Homestead Services -- Florida Homestead Exemption Act MiniBB / Asset Protection and Estate Planning /
Inter Vivos Trusts and Homestead AGO 90-70
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