Clients often engage realtors and brokerages with varying property needs for buying or selling. One of the most important aspects of purchasing real property in Florida is whether the property can qualify as a homestead property under the Florida Constitution. While most purchasers intend to own their properties outright, other purchasers may wish to protect their property by placing it in a Trust. This raises the question of whether a property purchaser/owner can maintain homestead protection if they hold the property in a trust. This blog post aims to shed light on the implications of placing Florida real property in a trust and its impact on homestead protection.
To qualify for homestead protection under the Florida Constitution, a property owner must meet specific criteria, including:
- The property must be the owner’s primary residence, and the owner must reside on the property;
- Homestead protection generally limits the property to half an acre within a municipality and up to 160 contiguous acres outside a municipality.
- The property owner must hold legal title or beneficial title to the residence.
Homestead Exemption and Trusts
So, can your clients preserve their homestead exemption when they place the property itself in a trust? The answer is yes! — with conditions.
In brief, Florida case law and opinions issued by the Florida Attorney General recognize that Trust beneficiaries can maintain their homestead exemption as long as they meet certain requirements, even though the Florida Constitution does not explicitly address homestead protection for properties held in Trust. Generally, property placed in a Trust grants “legal title” of the property to the Trust. Beneficiaries of the Trust have “equitable title.” Accordingly, while the Trust may hold “legal title” to the property, your client may retain their homestead tax exemption so long as your client is a beneficiary of the Trust, and the language of the Trust confers upon them a “present possessory interest for life.”
In conclusion, the interplay between homestead protection and property held in a Trust in Florida is complex and depends on various factors. Therefore, it may be beneficial for your clients who have questions about homestead and trust property to seek professional legal advice to navigate the intricacies of homestead protection.