Can a Living Trust Qualify for the Florida Homestead Exemption? – Asset Protection

You can still get the homestead exemption even if your home is owned by your living trust. In Florida, a homestead exemption can offer significant property tax savings and legal protections for a homeowner’s primary residence. However, whether a living trust can qualify for a Florida homestead exemption depends on how the trust is structured and the specific circumstances.

Ownership Through a Trust

Florida law accommodates the homestead exemption for properties in a revocable living trust. This arrangement hinges on the trust beneficiary, who should also be the home’s occupant, maintaining direct control over the trust.

The individual must have the authority to revoke the trust, signifying they possess substantial control over its assets. In this context, the beneficiary, who establishes the trust, must use the property as their primary residence to qualify for the homestead exemption.

The rationale behind this provision is to ensure that the homestead protection and tax benefits extend to those who genuinely use the property as their primary and personal residence, aligning with the spirit of the Florida Constitution’s homestead exemption.

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Revocable vs. Irrevocable Trusts

The distinction between revocable and irrevocable trusts plays a pivotal role in determining eligibility for the homestead exemption.

For revocable trusts, where the settlor (the person who creates the trust) retains the power to amend or revoke the trust, qualifying for the exemption is more straightforward. This is because the settlor can be considered the equitable owner of the property, as they retain control over the trust’s assets, including the home.

In contrast, with irrevocable trusts, the settlor relinquishes control over the trust’s assets, making it more complex to claim the homestead exemption. In such cases, the beneficiary of the trust—who must reside in the property—must demonstrate that they hold an equitable title to the property, which can be more challenging without the direct control characteristic of revocable trusts.

Legal Requirements

To qualify for the Homestead Exemption when your home is in a trust, specific conditions must be met:

1. Beneficial Ownership: The individual claiming the homestead exemption must be the beneficial owner of the property. This means that the person must have the right to live in the home and benefit from its use. The trust document must clearly establish that the individual has a beneficial interest in the property.
2. Residency Requirement: As with any homestead claim, the person applying for the exemption must physically reside in the home and intend to make it their permanent residence.
3. Type of Trust: The structure of the trust is also crucial. The trust must be a revocable trust, allowing the grantor (the person who created the trust) to maintain control over the trust assets, including the ability to revise or revoke the trust. This control is essential for the property to qualify for the homestead exemption.

Steps to Apply for Homestead Exemption with a Trust

• Document Review: Ensure that the trust documents explicitly state that the grantor (or another specified beneficiary) possesses the right to use and occupy the property as their primary residence.
• Application Process: When applying for the homestead exemption, you must provide the county property appraiser with the trust agreement along with the standard proof of residency. This typically includes a Florida driver’s license, Florida vehicle registration, and voter registration, all showing the homestead address.
• Clarify the Trust’s Terms: You may need to provide additional documentation to clarify the terms of the trust, proving that it meets Florida’s requirements for a homestead exemption.

Irrevocable Trusts

Generally, properties in irrevocable trusts do not qualify unless specific provisions are made for the grantor’s benefit concerning the property.

About the Author

Gideon Alper is an attorney who specializes in asset protection planning. He graduated with honors from Emory University Law School and has been practicing law for almost 15 years.

Gideon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.