What Happens to My Home After I Die?
Photo courtesy David Sawyer via Flickr
For most families, their home is the biggest financial asset they own. Unlike most items you own, owning a home is a legal form of ownership, as well as a financial one. For these reasons, many people are not entirely clear about what would happen to their home if they should pass away.
There are many factors that come into play in answering that question. First is legal ownership and the second is whether the home qualifies as homestead. If you own your home jointly with a spouse, or another person jointly with rights of survivorship, the home will automatically pass to the spouse or joint owners.
The next question is if the home qualifies as a homestead. In Florida, homestead protection is a powerful legal designation both before and after death. The most important benefit of homestead status is that the property will pass to your heirs free from creditors.
A notable exception in the homestead law’s ability to protect an estate from creditors is in the case of a property that has a mortgage, or owes money for repairs or HOA fees, regardless of whether a lien has been placed on the property. In such a circumstance, the protection does not apply and those creditors can legally seek to recover the debt.
Both the homestead laws and the procedures required to make sure they are in force are highly complex. Once you own property, especially as a principal residence, it becomes even more important for an attorney to handle your estate planning and make sure you and your family are protected. Plus, the ownership of a home or property is only one part of one’s estate. There are often multiple interconnected factors involved, touching the lives love many of your family members.
Definition of Homestead
A homestead is defined in Florida as a principal place of residence on property up to a half acre within a municipality’s boundaries, or up to 160 contiguous acres outside any municipal boundaries. As long as the home and attached land serve as the primary residence of an individual or family, it qualifies for homestead protection. Over time, Florida’s courts have expanded the application of homestead protection to include condominiums, manufactured homes, and mobile homes, not just single-family homes.
Not all properties are protected by homestead laws. For example, any property that is purchased to be a future residence is protected as a homestead only after it is occupied as a principal residence. Also, it must be the owner's main residence. A second home or investment property is not protected under Florida’s homestead laws
How do homestead laws impact estate planning?
Primarily, homestead laws protect your home for the benefit of your family, and prevents your family from having to be sold to pay off creditors after you pass. To maintain this exemption, however, the property must pass to someone who is declared your “heir(s) at law.” This means to protect your home from creditors, you must give your home via a will to a spouse, children, siblings, nieces, and nephews, or other familial relatives under the law. If you give your home to a friend or romantic partner, your home may be subject to creditors, which would include medical and credit card debt. Also, if you pass without a will your home will pass to your heirs via Florida law. This might not match what you intend to happen to your property after you pass.
As with many legal protections or exemptions, if you don't protect it or formally request it from the court, you won't get it. Too often, people who attempt to create a will or take an estate through probate without an attorney fall victim to errors of omission like this. Furthermore, once the estate is settled, it is nearly impossible to reverse this and petition the court for those protections at a later date.
If you have questions about how you can protect your homestead for your family, or would simply like to talk to a qualified estate planning attorney how to protect your family in general, contact Nexus Legal Solutions at 407-900-7722 for a consultation.