Today’s article is about what happens to a Florida homestead, a/k/a “family home” when someone forgets all about their spouse and then dies without ever having added a spouse to the title of the family home. This misstep can to a messy probate for the surviving spouse. Even worse, if the deceased spouse neglected to create a last will and testament in Florida, the surviving spouse’s inheritance of the Florida homestead may be compromised.
Helping folks understand the consequences for a surviving spouse’s homestead with no Florida estate planning, as a preventative measure, is the focus of this week’s article.
Spousal Failure to Add a Spouse to a Homestead Title [the Consequences]
If someone fails to add a spouse to the homestead title and also passes away without a will, a probate will be required and the state laws of intestacy will dictate to whom the homestead passes and this is not solely the surviving spouse.
The Life Estate in Florida
In an effort to protect a surviving spouse and the sanctity of the home while still protecting the rights of lawful children, the state of Florida homestead laws dictate that a surviving spouse is entitled to a “life estate” in the homestead property and that a “remainder interest” goes to the lawful children of the deceased spouse.
So, again if there is no last will and the real property was never jointly titled in the spouses names, a probate administration in Florida will be required. Next, after enduring the probate process, the surviving spouse will end up with what is called a “life estate”. You may think this sounds okay if you’re guessing that this means that spouse has a legal interest for life and that upon her death the property will pass to the deceased spouse’s heirs. You would only be partially correct in this assumption, because life estates are a big problems for owners for a couple of reasons as follows.
First, life estates present problems for refinancing the existing mortgage on the real property. Simply put, banks are unable to allow the refinance because the remainder beneficiaries have an interest and generally, aren’t interested in being put on the mortgage. Even if they’re willing to sign on the mortgage, this presents a title problem because their interest is not a present one…but rather a future interest. Second, the owner of the life estate still must answer to the remainder beneficiaries for matters such as property maintenance and of course, the sale of the real property would need to be approved by the remainder beneficiaries.
The Homestead Waiver in Florida
The laws of intestacy in Florida will change if a “homestead waiver” in a document such as a Florida prenuptial agreement, has ever been signed by the surviving spouse. Sometimes, a homestead waiver is signed inadvertently as part of a refinancing by the couple and this can actually make matters worse.
If a homestead waiver has been signed, then the real property will pass 50% to the surviving spouse and 50% to the children of the deceased spouse. This unfortunate event happens because the surviving spouse had waived the protection of the Florida homestead laws. This means that the surviving spouse will become a 50% owner with the surviving children of the deceased spouse.
Does this sound okay?
Technically, the children can charge the surviving spouse rent in this scenario, although they are also jointly responsible for expenses. Of course, this also creates issues, as mentioned above, with refinancing, and a resale of the home and essentially makes the surviving spouse answerable to the children concerning all matters related to the real property.
Titling the Florida homestead JOINTLY or
Using a Revocable Living Trust…
If a property is titled jointly with a spouse it can pass to a them without a need for probate for other proceedings. If a spouses does not wish to leave the homestead property solely to the surviving spouse, this can be most efficiently accomplished by utilizing a Florida revocable living trust and offering a life interest the spouse or some variation thereof.
The trust option is much preferable to the intestacy laws because the trust agreement can dictate what happens if the home needs to be sold. For example, the home could be downsized or replaced and surplus proceeds could be held the trust to support the spouse and then pass to the children.
Of course, all of the above requires a careful customized look at the specific estate circumstances.
Steve Gibbs, Esq.
This is an updated version of an original post dated August 25, 2016.