Understanding Homestead Laws in Florida: Implications for Estate Planning

Understanding Homestead Laws in Florida: Implications for Estate Planning

Four Things to Know

One of the most significant assets that Floridians may own is their home. Being a homeowner comes with a sense of security, but it also comes with specific responsibilities. Homestead laws in Florida provide legal protection to homeowners with regard to their primary residence. However, understanding these laws and how they affect estate planning can be challenging.

In this blog, we'll delve into the following four things you should know about Florida's homestead laws and how they can impact you and your estate planning:

  1. Qualifying for the homestead exemption
  2. Protections from creditor claims
  3. Protections from property tax increases
  4. Legal limitations

Qualifying for Homestead Property Tax Exemption

Eligibility for the homestead exemption in Florida is like a key that unlocks a treasure chest of benefits for property owners and their heirs. Not the least of which is a valuable property tax exemption of up to $50,000. To qualify, one must hold the title to the property, and it must be their (or their dependant's) primary residence as of January 1st of the tax year in question. This timing is critical; miss this date, and you may have to wait until the next year to claim the exemption.

Additionally, the property owner must be a permanent resident of Florida, and they must file a formal declaration to this effect with the appropriate county property appraiser. In cases where a property owner has recently moved to the state or owns property elsewhere, they may need to provide proof of giving up their residency in the other state.

Protections from Creditor Claims During Probate

Under Florida's homestead laws, your primary residence - your homestead - enjoys substantial protection from creditor claims and forced sale during your lifetime. This means that creditors cannot force the sale of your homestead to fulfill the debt you owe them. This protection is in effect as long as the property meets the requirements to be considered a homestead under Florida law.

Once you pass away, the protection provided by the homestead laws is passed along to your surviving spouse and heirs. Even if you pass away with outstanding debts, creditors cannot force the sale of the homestead property to satisfy those debts as part of the probate process.

Caps on Property Tax Increases

Florida's Homestead Laws offer another significant benefit: a cap on how much your property taxes can increase each year. This protection is known as the "Save Our Homes" amendment cap.

Once the homestead exemption is applied to a property, the assessed value of that property for tax purposes cannot increase more than 3% annually or the rate of inflation, whichever is lower. This cap applies even if the market value of the property increases significantly.

The "Save Our Homes" cap provides property owners with predictability and stability regarding property taxes, helping them avoid sudden, unmanageable increases. Upon the homeowner's demise, these benefits are potentially available to a surviving spouse or heir, provided they continue to use the property as their primary residence and apply for the homestead exemption.

However, realizing that the cap gets reset when the property changes ownership is crucial. Therefore, if you are inheriting a property, consult with an estate planning attorney to understand how this reset can impact your property taxes and how best to navigate your situation under Florida’s homestead laws.

Legal Limitations of Florida's Homestead Laws

While Florida's homestead laws offer significant benefits, they come with certain limitations that property owners should understand. Foremost among these is the restriction on who you can leave your homestead property to when you pass away and still have the homestead exemptions apply.

According to Florida law, if a spouse or minor child survives you, you cannot leave your homestead property to anyone else through your will. The property must pass to your surviving spouse or minor child to maintain the homestead exemption benefits. Suppose you attempt to leave your homestead property to someone else under such circumstances. In that case, the law will override your will, and the property will pass to your surviving spouse or minor child, irrespective of your stated intent.

Suppose you pass away without a surviving spouse or minor child. In that case, you can leave your homestead property to anyone through your will, and the homestead exemptions should continue to apply, provided the new owner uses the property as their primary residence and applies for the homestead exemption.

As Florida's homestead laws have many complexities and nuances, it is highly advisable for property owners to consult with an experienced estate planning attorney to understand how these laws can impact their estate planning strategy and ensure that they are making the most out of these crucial legal protections.

Have questions about Florida's homestead laws? Contact Dorcey Law Firm online to schedule a consultation with one of our estate tax planning attorneys.