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Frequently Asked Questions About Estate PlanningThis is probably the MOST frequently asked question
that any Florida attorney receives. The answer is no, maybe, and
yes. Maybe because retiring and moving to another state is a major life event. A colleague once did a non-scientific study of his own clients and discovered that the average client reviewed his or her estate plan every 19.6 years. Many of my new clients are not even aware of what is in their will. That is one reason why you may need a new "Florida" will. Also, there may be things in Florida law that differ from the laws of your former home state. For example, Florida law allows you to attach a separate writing to your will leaving items of tangible personal property to the people indicated. This allows you to make changes without having to see a lawyer and have a new will written. Tangible personal property is such things as furniture, artwork, automobiles, and other physical items. Yes because
if you intend to continue to reside part of the year in your former
home state it has an income tax, or other taxes that you seek to
avoid, then you may need a "Florida will" to prove that you are
no longer domiciled in, or a resident of, your former state. Chances
are, a will prepared by your lawyer in that state identifies you
as a resident of a county in that state. This can be used against
you. A will made in Florida will identify you as a resident of a
county in Florida. DO I NEED A LIVING TRUST IF I ALREADY HAVE A LIVING WILL? WHAT IS THE DIFFERENCE? It is unfortunate that these two important estate planning documents have such similar names. It frequently causes confusion, but the two are very different. A living will is a set of instructions to your physicians and loved ones in the event that you should find yourself in a persistent vegetative state, an end-state condition, or a terminal condition and are unable to express your desires yourself. In other words, if you have an irreversible medical condition and life support, water, and food would only serve to artificially prolong the process of your dying, would you want those things provided or not? A living trust provides instructions for
the management and final distribution of your property. For a full
discussion of living trusts, please see "What Is A Living Trust
And Do I Need One?" A will is a set of written instructions for the
distribution of your property when you die. During your lifetime,
a will does nothing. Upon your death, a copy of your will is filed
with the local court and probate proceedings are started. Please
see, "What Is Probate?" Your will
name your Personal Representative. See, "What Is A Personal Representative?"
If you have minor beneficiaries, disabled beneficiaries, a taxable
estate, or certain other situations, then your will may also include
a testamentary trust naming a trustee for the management of the
property for the benefit of those named. Anyone who owns property
or has children needs a will. If you do not have a will, then the
state decides who gets your property. In addition, the court will
decide who will be your Personal Representative and it may be necessary
for that Personal Representative to obtain a bond at the expense
of the estate. [Florida homestead, homestead exemptions, and partition can be a complicated subject. This answer is not intended to be an exhaustive discussion of the topics presented. You should consult a lawyer of your choosing before taking or altering title to property.] People sometimes create large problems for themselves while trying to avoid small problems. If you are a permanent resident of the state of Florida, your primary residence is your homestead and is exempt from seizure by your creditors. When you pass away, your primary residence is not subject to probate and is not part of your probate estate if it descends to your spouse or lineal descendants. Instead of the home being probated a Petition to Determine Homestead is filed with the probate court and the property passes to your heirs outside of probate. Thus, dying with your primary residence in your name is a small problem. On the other hand, what happens if you put your property in joint names with your children or someone else who does not reside in the home; i.e., as joint tenants with right of survivorship or as tenants in common? One important thing that happens is that one-half of the property loses its homestead status and could be subject to the creditors of your co-owner. If the creditor of a co-owner, including a child who is a co-owner, levies on your co-owner’s share of the property, the creditor becomes the owner of that share. Although your homestead is normally exempt from forced sale, a co-tenant can force a sale to recover its beneficial interest in the property. Admittedly, I have not seen a case in Florida where a co-owner’s creditor has successfully done this. However, there are cases where a co-tenant has successfully sued to force the sale of a homestead to recover its beneficial interest. There are already cases where the Federal courts in Florida have held that Federal laws concerning tax liens and asset forfeiture for crimes preempt Florida homestead protection. You can always take solace in knowing that the U.S. government considers taking your home a “last resort.” If the real property owned as joint tenants with right of survivorship is the permanent residence of both co-owners, it is homestead as to both and is exempt from creditors of either while both are living. However, if one dies and it automatically passes to the other, it may pass subject to the claims of creditors of the first to die as to his or her one-half interest assuming that the survivor is not a lineal descendant. Any time two unrelated people, or even related but unmarried people, take title to property there ought to be a written agreement in case one wishes to sell the property or dissolve the partnership. Florida does not recognize common law marriages among residents of Florida. Florida laws regarding divorces will not help if an unmarried couple that co-owns property separates. They will have to rely on the law pertaining to partition of property. If the co-owners own the property as tenants in common, which is the presumption unless the deed says otherwise, then either co-owner can leave their one-half to whomever they wish and, if the beneficiary is a lineal descendant or spouse, the decedent’s share will pass free of creditor claims. Property that is not homestead is even more at risk. It is in no way protected by Florida’s substantial public policy for the protection of homestead property. In a 2003 Federal District Court case, Linda Nikirk and her son took title to a rental condominium as “joint tenants with a right of survivorship” in 1996. Four years later she sold the condominium and the IRS attached one-half of the sales proceeds to pay part of her sons back due income taxes. Linda sued the IRS for a refund of the money. She explained that she only put the condominium in both names for “estate planning purposes.” She had evidence to support this claim in that she had reported all of the condominiums income and deductions on her personal return and handled the rental of the condominium. The IRS argued that what mattered was that the son was a one half owner. Furthermore, he did not contribute to the condominiums purchase. The Judge agreed with the IRS and held that it was entitled to one half of the proceeds of the sale because the son held legal title to one half of the property. The bottom line is that I do not recommend putting
property in joint names with children or others as it may have unintended
negative consequences. If the property is your homestead, trying
to avoid a small problem may create a bigger problem. While it is
true that non-homestead real property may be subject to probate
(unless held in a trust), the expense and delay of homestead pales
in comparison to what happened to Linda Nikirk. Poor Ms. Nikirk
lost one-half the value of her rental condominium and undoubtedly
incurred substantial expense when she unsuccessfully attempted to
recover the money. Probate would undoubtedly have been cheaper and
faster. Why open yourself to a chance of an avoidable problem? Is it a good idea for me to put my home in a living trust to avoid probate? The short answer is probably not. At least one Florida Federal bankruptcy court has held that a Chapter 7 debtor may not claim the Florida homestead exemption from creditors for a primary residence held in a revocable living trust. Article 10, §4 of the Florida Constitution exempts from forced sale real property owned by a “natural person.” However, where a mother passed away leaving her homestead to an only daughter in a spendthrift trust for which her husband was the trustee, the court held that the daughter took the property free of creditor claims upon her mother’s death. But the court indicated that the result might have been different if the daughter had been both the trustee and the beneficiary of the trust. Living trusts do not provide any protection from the claims of the trustmaker’s creditors. This is because a living trust is revocable and the trustmaker is usually the trustee as well, until the trustmaker becomes disabled or dies. Once again, we see that the homestead exemption
from creditors is ironclad so long as a natural person owns the
property. It remains exempt from creditors of the decedent so long
as it passes to lineal descendants and it passes to them without
being probated. Transferring the homestead to a living trust introduces
a greater degree of risk and uncertain to avoid a small problem
so why do it?
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The hiring of a lawyer is an important decision that should not be based solely on advertisement. Before you decide, ask Harry T. Hackney to send you free written information about his qualifications and experience. The purpose of this Web site is to provide general information in the fields of law represented. Each situation is unique and the facts will vary with individual circumstances. Information contained on this site is not offered as legal advice, and is based primarily on the law of the State of Florida. |
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