What legal differences should new Florida residents understand when it comes to estate planning?
When individuals relocate to Florida from other states like California, New York, or Ohio, it’s important to understand that estate planning laws can be significantly different. Florida operates under its own legal system, especially when it comes to property ownership, trusts, and asset protection. Attorney John Marshall highlights how essential it is to revisit and adjust estate plans after establishing residency in Florida.
What is tenancy by the entirety and why is it important for married couples in Florida?
Florida law recognizes a specific form of property ownership called “tenancy by the entirety” for married couples, regardless of gender. This form of joint ownership not only ensures that a surviving spouse automatically inherits the property but also protects that property from the individual creditors of either spouse. For example, if one spouse passes away with credit card debt or dies owing money on a vehicle, the surviving spouse is not liable for those debts if the assets are jointly owned.
This level of asset protection also applies during life. If one spouse is sued—for instance, after an accident at a shooting range—the jointly owned property is shielded from the resulting liability. However, this protection only applies to debts held individually, not to joint debts. As such, it’s recommended that spouses in Florida own their assets jointly but maintain separate debt obligations whenever possible.
Why might trust-owned property not offer the same creditor protection?
While trusts are a popular estate planning tool, transferring jointly owned assets into a trust may strip them of tenancy by the entirety protections. Florida courts have determined that property held in trust—even if both trustees are married—is not considered to be owned by a married couple. To maintain the protections while still reaping the benefits of a trust, John Marshall recommends using payable-on-death arrangements or tools like Lady Bird deeds to pass assets into a trust only upon death. This allows couples to maintain creditor protection during life while avoiding probate after death.
What are the unique benefits of Florida’s homestead law?
Florida offers robust benefits for residents who qualify for the state’s homestead exemption. The exemption provides a $50,000 deduction on the assessed value of a primary residence for property tax purposes. The first $25,000 is exempt from all property taxes, while the next $25,000 is exempt from all except school-related taxes. This can significantly reduce the annual tax burden for homeowners.
Additionally, Florida’s “Save Our Homes” initiative limits increases in the assessed value of a homestead property to no more than 3% annually, regardless of how much the market value increases. To qualify, homeowners must own the property as of January 1 and file for the exemption by March 1 of the same year. Fortunately, applications can now be submitted online.
How do Florida’s homestead protections shield property from creditors?
Beyond tax savings, Florida’s homestead laws also provide substantial protection from creditors under the state constitution. Once a property is declared a homestead, it is automatically protected from most creditor claims without any need to file. The exemption applies to up to half an acre of land within city limits and up to 160 acres outside city limits.
Certain types of creditors—such as the IRS, mortgage holders, or contractors with valid liens—may still pursue claims, but all other creditors, including those holding medical debts or credit card judgments, cannot touch the homestead property. These protections also extend posthumously, preventing Medicaid from placing liens on the homestead to recover costs after the homeowner’s death.
How can Florida’s homestead laws protect a family home from out-of-state creditors?
John Marshall shares the story of a woman who passed away while receiving medical care in New Jersey. Although attorneys attempted to administer her estate there due to her medical debts, Marshall successfully demonstrated that her primary residence was in Florida. By invoking Florida’s constitutional homestead protection, her family was able to retain the home and shield it from creditor claims.
What are the key estate planning takeaways for new Florida residents?
- Review and revise estate plans after relocating to Florida.
- Use tenancy by the entirety to protect jointly owned property between spouses.
- Keep debts separate to maintain creditor protections.
- File for the homestead exemption early to secure both tax and constitutional benefits.
- Consult with a Florida estate planning attorney to ensure proper asset titling and legal compliance.
Florida’s estate planning laws provide some of the strongest protections for homeowners and married couples in the country—but only if they are implemented correctly. New residents should seek legal guidance to fully benefit from what the Sunshine State has to offer.