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To Transfer Your Homestead into Trust or Not?

December 12, 2018

Many Floridians establish Living/Revocable Trusts to transfer their homestead to their beneficiaries at death.  However, many are unaware of the negative consequences this transfer may have on the protectionist rights provided by Florida’s homestead laws. In order to protect those rights, certain precautions must be made:

  1. The trust must adhere to the Florida constitutional provisions related to descent and devise. Florida’s Constitution limits to whom a homestead may be given when that person is survived by a spouse or minor child.  If the trust gives the homestead to someone other than the spouse or minor child, the gift may be held invalid and the statute on property transfers at death would determine who would take the homestead at death.

  2. Due on Transfer Clause. When transferring real property with a mortgage, the unpaid mortgage usually becomes “due on transfer” under a clause in the mortgage contract. When the transfer is to a revocable trust and not a third party, the due on transfer clause does not kick in but the owner should still notify the lender of why the transfer of due clause should not be triggered before recording the new deed.

  3. Name the trust correctly. Properly naming the trust on the deed avoids problems with later sales, transfers, or gifts.  The deed should include the name of the trust, the name of the trustee and the date of the trust.

  4. Protection of homestead tax exemption. Since an individual transferring property into trust remains the owner of the property and may use and encumber the property during their lifetime, the transfer of a Florida homestead into trust should not jeopardize the Save Our Homes property tax cap, unless the Florida homestead does not remain the individual’s primary residence.   

  5. Granting power to the trustee. To avoid problems when a title examiner is determining whether the trustee has the requisite authority to transfer, mortgage, encumber, or convey the real property in question, the deed should contain the language from Florida Statute §689.073.

If you feel as though you’ve made any of these mistakes on your Florida Homestead, contact the Law Office of Ashley Zohar, PLLC to correct these pitfalls to protection.

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