One thing many often wonder regarding there homestead property in Florida when placing it into a trust is what are the implications on the creditor protections granted to that property by the homestead provisions of the Florida Constitution. The language outlining homestead in the Florida Constitution dictates that homestead must be owned by a “Natural Person”, this has led many to believe that homestead protection should not apply to property placed into a revocable trust.
While the answer to this question is not definitely settled, the majority of cases have held the protection continues to apply. In 2001 case of In re Bosonetto, a bankruptcy judge found that homestead protections did not apply as the trust was not a natural person. However since that decision five Florida courts, 2 of which were bankruptcy courts, have refused to uphold Bosonetto. (Callava v. Feinberg, Engelke v. Estate of Engelke, In Re Alexander, In Re Edwards, Cutler v. Cutler)
Ultimately, if you are at a high risk for the need for enhanced creditor protection you may decide to forgot placing a property into a revocable trust as an abundance of caution. However, the prevailing doctrine of the court appears to be a recognition of revocable trusts as stand-ins for natural purposes. Therefore, from a practical perspective, most people would be far better off placing there property into a trust then leaving it outside of one.
Most peoples primary concern when it comes to homestead is the tax exemption, and when it comes to that, there is good news. The entire state of Florida have allowed the tax breaks applying to homestead property to apply to that property held inside of a revocable trust.
If you have any questions about how your trust might effect your homestead property, give The Weil Law Group, PA a call at 954-603-7603. Or you can always set up a FREE goal planning session where we would be happy to go over your questions with you.