More Protections Under Homestead
A recent case out of Dade County, Florida, answers another probate issue regarding the protections provided by Florida’s Article X, Section 4 constitution concerning homestead property. The facts of the case are fairly routine and simple. The decedent owned property and devised it to one of his children and stated in his Will,
“when the house is sold by my son, he will divide the proceeds equally among my children. My son is not to be forced to sell the house against his will.”
The decedent’s son did sell the property during the course of the probate proceedings and placed the funds from the sale into an estate account pending closure of the administration of the estate. The court determined that even though the sale of the residence took place during the estate proceedings, the proceeds were protected from creditors. In essence, the son’s sale of the property did not change the legal consequences of the bequest from the decedent to the heir. The Court also stated that following the decedent’s death, the son had legal ownership of the property and such ownership places the property into the son’s name which takes it out of reach to any expense or creditor claim incurred by or for the decedent.
The twist of this case is that the court ruled that not only were the proceeds protected from creditors, but they were also protected from attorney fees and administrative expenses incurred by the estate. It is well known in Florida that homestead property passes outside of the administrative proceedings of probate. As a result, the Court specifically ruled that the proceeds from the sale of homestead property must not be subject to any of the administrative expenses of the estate (which includes attorney fees), because homestead property is not part of the estate proceedings. The Court went on to state that homestead property can never be forced to fund the administrative expenses of probate.
Historically, many practioners believed that the funds from the sale of homestead property could be used for probate administrative expenses. However, the Dade County Circuit Court clarifies that issue that such funds cannot generically be used for such purpose.
By contrast, Florida law does provide that a personal representative can lien homestead property for those administrative expenses incurred while maintaining the property prior to and during administration of an estate. The key here is that the expenses are limited to the preservation or maintenance of the homestead property and not for such expenses as publication of the Notice to Creditors.
The message of this case should be clear, that one of the most important assets a Florida resident possesses is his or her homestead property. It is protected against creditor claims (except for taxes, mortgages and claim of liens under Chapter 713, Florida Statutes) and now it is protected against claims for administrative expenses that were not for the benefit of the homestead property.
In today’s current market meltdown, if you are not sure whether your property is protected against certain creditors, take the time to visit with an attorney of your choice and discuss whether your property is protected. It may well be the best consultation you make.