Taxation & Estate Planning

APPEALS COURT CHANGES ITS MIND ON HOMESTEAD EXEMPTION [FLORIDA]

By Charles Rubin

Florida's Constitution provides that if a decedent's homestead passes to the heirs of the decedent, third party creditors of the decedent cannot reach or levy against the homestead. What happens if the decedent provides in his or her last Will that the homestead is devised to a child, but should be used (along with other non-homestead property that is specifically devised) to pay debts of the decedent if there are insufficient other assets?

Florida's 3rd District Court of Appeals had previously provided that the constitutional protection trumps the decedent's direction, and thus the homestead would continue to be exempt from creditors of the decedent. That court, on rehearing en banc, has changed its collective mind - thus, if directed by a decedent, his or her homestead will be encumbered by the debts of a decedent even if the property will otherwise pass to a protected heir.

Cutler v. Cutler, 3rd DCA, Case No. 3D04-3070 (September 3, 2008).

Full post as published by Rubin on Tax on November 01, 2008 (boomark / email).