Florida Estate Planning

If you do not have a will and or a trust, the law determines who will be your heirs. 

Many people think that without an estate plan that their property will automatically pass to their spouse at death, which is not always the case. 

Inheritance laws vary and depend on whether you and your spouse have and which spouse is the parent of a child.

Florida also is an elective share law, which means that your spouse is entitled to 30% of your estate, which includes your property, beneficiary designated assets, cash value of life insurance, pension plans, homestead and revocable living trust assets. The elective share applies even if you have a will and or a trust.  However, you and your spouse may enter into a properly drawn agreement where a spouse agrees to take less than the elective share or designate the property subject to the elective share.

Florida has a restrictive and onerous homestead law that designates who may inherit and reside in homestead. A will or a trust may not resolve homestead issues but a couple may be able to resolve the situation with a properly drawn agreement.

It is never a good idea to leave money directly to minors.  If you do so, the courts will become involved to protect your children and a judge and someone who you trust and who knows your family will make your decisions.  You can leave money in trust for your children where you decide who handles the money and how they handle it for your children’s benefit.  However, court involvement does serve a useful purpose if you cannot the people who will manage the funds.

Florida Probate

Every state has its own rules regarding inheritance, wills, trusts and probate.  While a will or trust done in another state may be valid in Florida it may not deal with unique Florida laws and rules which may supersede provisions in the will.  Florida has unique homestead laws that regulate to whom you can leave your homestead. You are not free to leave your homestead to whom you wish.  Your out of state will or trust may not deal with Florida issues and may cause unexpected complications.

Some states allow handwritten wills and each state has its own rules regarding handwritten wills also called holographic wills.  Florida will not recognize a holographic will written elsewhere.  .

Florida is a state where wills and trusts are extensively regulated. Due to the large number of seniors in Florida, there are a number of legal requirements in Florida regarding the execution of wills and trusts. Florida does not recognize holographic (handwritten and unwitnessed) wills  under any circumstances. It does not matter if the will was validly probated in another state or was valid in the state where the person signed it. 

Therefore, if someone who lives in Texas which recognizes holographic wills has a vacation property in Florida, a Florida title company and a Florida court will not recognize and give effect to the holographic will.

Unlike other states, Florida also has strict and unique rules regulating the signing and witnessing of trusts.  A Trustee has certain mandatory duties in Florida including disclosure requirements to beneficiaries.

In Florida there are presumptive fees for lawyers and Personal Representatives (executors) set by the legislature for probates. These combined fees can reach as high as 6%. The Courts supervise probates with the extent of the supervision depending on local probate court. In Miami Dade County the court will micro manage a probate while other counties will let the Personal Representative manage the estate with little interference unless deadlines are missed or beneficiaries or creditors have issues with the manner the estate is being administered.

Florida has its share of will and trust contests and the lawyers who specialize in will and trust litigation have a strong lobby and a lot of influence.

Florida Homestead

Florida homestead laws are detailed and complex. Florida restricts to whom you can leave your homestead. For example, unless your spouse co-owns your homestead, if you have minor children and you pass away, your spouse will have the right to live in the house and when she passes away your children will own the homestead.  Your spouse will not be free to sell your house.   If you have minor children and no spouse, then your children will own the house when you pass away.  If you are married and have adult children, you can only leave your house to your spouse unless you and your spouse enter into a valid and properly drafted agreement.

The impact of these rules vary depending on a number of factors. If the spouses own the homestead together with rights of survivorship, then the homestead will pass to the surviving spouse.  If there are no minor children a spouse can waive her homestead rights through a marital agreement or a deed with statutory language dealing specifically with homesteads.  There is also a relatively new provision in the law allows a surviving spouse to relinquish her life estate  in exchange for owning one half of the house provided that six months after her spouse dies the surviving spouse strictly follows legal procedures set forth in the law.

Florida has popular and favorable laws regarding real estate tax exemptions for homesteads. The exemption can remove up to $50,000 from the value of the house for property tax assessments. In addition, the homestead exemption limits future annual increases in assessed value to 3% or less. Your Florida homestead is also protected from creditor claims.

Florida Asset Protection

Florida is a great state for asset protection and a poor state for creditors. The following are some examples of what assets are exempt from creditors:

Homestead

  • Property held as tenancy by the entirety by spouses for the debts of one spouse.
  • Annuity contract proceeds
  • Life insurance
  • Alimony and child support
  • Wages of the head of a household.

The list is not all of the properties subject to creditor protection and does not include the exceptions for super creditors such as the IRS and children under child support laws. Federal bankruptcy judges also have additional powers regarding homesteads.

Even though the Florida exemptions from creditors are broad planning is still needed. For example, not all property held jointly by a couple is tenancy by the entirety property.  For property to qualify as tenancy by the entirety, the property must have the following characteristics:

  • Both spouses must own the property and have joint authority over the property.
  • The joint interest must have originated at the same time in the same instrument.
  • The parties must have been married when they acquired the property.
  • At the first death, the surviving spouse will completely own the property.

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