Florida residents, like those of other states, often set up trusts as part of their estate planning. If the trust is intended to be operative during the person’s lifetime, the person will typically transfer some or all of his or her assets into the trust. But what if the property transferred into the trust constitutes a homestead under Florida law (more on that here)? Should the personal representative seek to set aside the conveyance and bring the homestead back into the probate estate?
Like many Florida questions, the answer is: it depends. If the person has a spouse or minor child, there are restrictions on the person’s ability to transfer homestead property. Article X, Section 4(c) of the Florida Constitution provides:
The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child. The owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift and, if married, may by deed transfer the title to an estate by the entirety with the spouse. If the owner or spouse is incompetent, the method of alienation or encumbrance shall be as provided by law.
This would prevent, for example, a married man from validly conveying homestead property to a trust during his lifetime without his wife’s consent. If the man had attempted to do so prior to his death, his personal representative should petition the court to set aside the transfer and treat the homestead as part of the Florida probate estate.
If, on the other hand, the man was unmarried and had no minor children, the restrictions on transfer would not apply. This was the holding of In re Estate of Morrow, which involved a personal representative’s attempt to set aside a decedent’s prior conveyance of homestead property to a trust. In that case, the decedent was unmarried and had no minor children. The court held that, in those circumstances, the personal representative didn’t have a basis for challenging the transfer to the trust. The home was an asset of the trust and not an asset of the probate estate.
Practice Note: This discussion is not just academic. A Florida personal representative could have an affirmative duty to protect the assets of the probate estate by setting aside invalid transfers, and failure to do so could open the personal representative up to liability. Personal representatives and their attorneys should be aware of the restrictions on lifetime transfers of Florida homestead property and how they apply to a given estate.