New Florida Homestead Law for Surviving Spouse
Florida Homestead laws have long been a trap for the unwary due to the unique and specialized nature of Florida Homestead laws. To further complicate the matter, Fla. Stat. § 732.401 was revised effective October 1, 2010. This revision changed the rules for spouses and descendants receiving Homestead property at death.
Article X Section 4(c) of the Florida Constitution limits who can receive Homestead property upon the death of an owner if he or she is survived by a spouse or a minor child. The revision to Fla. Stat. § 732.401 allows the surviving spouse to make an election, within six months from the date of death, to take a one-half interest as a tenant in common in the Homestead property instead of a life estate.
A one-half tenant in common interest gives the surviving spouse an ownership interest in the Homestead, which allows the surviving spouse to bring a partition action to sell the property. If the property is sold, the surviving spouse will generally receive one-half of the proceeds of any sale. Prior to the enactment of the revised Florida Homestead statute, if the Homestead was not devised in a way that was permitted by Florida law, the surviving spouse automatically received a life estate in the Homestead property and any minor children received a vested remainder in the property. The life estate interest could not be partitioned, which required the surviving spouse and children of the deceased to negotiate a sale of the Homestead. If there was no agreement, the property could not be sold.
These arcane rules strained many family relationships especially, in second marriages. In these situations, the Florida Principal and Income Act governs the allocation of expenses between the life estate and vested remainder interest. The surviving spouse is generally responsible for any interest payments on the mortgage, property taxes, property insurance and repairs and the children are generally responsible for principal mortgage payments on the residence and any substantial capital expenditures.
To add another complicating factor, if the surviving spouse ever wanted to downsize, the surviving spouse had to negotiate with the children to allow a sale and they would have to determine a value for her life estate. While many see the new statute as a beneficial change, it is also important to note that it is to the detriment of the decedent’s minor children in many cases. A very elderly widow will receive one-half of the Homestead, rather than a life estate which may have zero value. The real winners in some situations will be the surviving spouse's children from an earlier marriage.
Therefore, this revised statute requires additional planning at the forefront to take into consideration this new contingency, and adds an additional issue to consider during the estate administration process. It is also important to note that the revised statute also approves of new planning techniques available to those with special needs children and with other unique planning objectives.
