Fla. Stat. § 736.151- Commentary to Florida Trust Code

Legal Commentary on Fla. Stat. § 736.151

Fla. Stat. § 736.151 makes clear that real property in a community property trust may qualify as the homestead of the settlor spouses for all purposes, including for purposes of creditor protection, devise restriction, and for the homestead tax exemption.

Community Property Trusts and Homestead Creditor Protection

Homestead property is given a large amount of creditor protection in Article X, Section 4(a)(1) of the Florida Constitution. Only a few types of creditors have any hope of ever attaching an interest to property protected as homestead. For most trusts (not community property trusts), we simply do not know if the homestead protection continues on a parcel moved into trust that would otherwise be considered the homestead of the settlors; the courts have disagreed on this matter. In re Bosonetto, 271 B.R. 403, 407 (Bankr. M.D. Fla. 2001) (“This Court finds that the Trust does own the Florida property by the express terms of the Trust or, alternatively, under a resulting trust and because a trust is not a natural person, Defendant Bosonetto may not claim the Florida property is covered by the homestead exemption.”); Engelke v. Estate of Engelke, 921 So. 2d 693, 696 (Fla. 4th DCA 2006) (“We note that in this case while Paul's residence was held in a revocable trust, it was owned by a "natural person" for purposes of the constitutional homestead exemption. Because Paul retained a right of revocation, he was free to revoke the trust at any point in time. Accordingly, he maintained an ownership interest in his residence, even though a revocable trust held title to the property. We therefore conclude that Paul's interest in his residence as beneficiary of his own revocable trust would entitle him to constitutional homestead protections.”).

However, there is no confusion for community property trusts. Fla. Stat. § 736.151 is clear that homestead protection will be allowed on property in a community property trust. Without this explicit clarification, a good argument could be made that all property moved into a community property trust ought to be made subject to creditors in accordance with Fla. Stat. § 736.1506. But we know now that for homestead property, creditor access will be disallowed, except for the super creditors contemplated in the Florida Constitution (allowing for construction liens, mortgage liens, and tax liens).

Community Property Trusts and Homestead Devise Restrictions

Homestead property in Florida is subject to a number of devise restrictions. A married individual does not have the option of devising homestead property to anyone other than a spouse under Florida law, unless a proper spousal waiver is obtained. This is explicitly stated in Fla. Stat. § 732.4015(1):

As provided by the State Constitution, the homestead shall not be subject to devise if the owner is survived by a spouse or a minor child or minor children, except that the homestead may be devised to the owner’s spouse if there is no minor child or minor children.

The term “devise” includes the use of a trust. Fla. Stat. § 732.4015(2). Thus, homestead property in joint trust between spouses can typically only be left to each other after one spouse passes away. Fla. Stat. § 736.151 makes clear that this rule also applies to community property trusts. Thus, unless both spouses waive their homestead rights (as described below), every community property trust which includes homestead property ought to leave the entire homestead property to the surviving spouse.

If spouses wished to avoid this homestead devise restriction, both spouses would likely need to waive their spousal rights to the homestead, as contemplated by Fla. Stat. § 732.702. To do this, a fair disclosure of all finances will be required. Such a disclosure may be advisable regardless for many spouses, as Fla. Stat. § 736.4012(1)(d) contemplates a lack of financial transparency as a valid reason to consider a community property trust unenforceable.

Community Property Trusts and Homestead Tax Exemption

Florida has long allowed for homestead tax exemptions on property held in trust, so long as the applicant for the exemption (1) has a present possessory interest in the homestead for life and (2) would otherwise qualify if the applicant owned the property outright. Op. Att'y Gen. Fla. 90-70 (1990); Op. Att'y Gen. Fla. 2005-52 (2005). Yet Fla. Stat. § 736.151(2) is the first time that a Florida statute section has so explicitly and clearly stated that the homestead exemption applies to a trust. For community property trusts, there is no ambiguity that the homestead exemption will apply to property which otherwise qualifies for the exemption.

Estate planners often put language in their trust instruments which grants the settlor a present possessory interest in any homestead property moved into trust. Fla. Stat. § 736.151(2) arguably makes that practice unnecessary for community property trusts. However, the safer practice is almost certainly inclusion of the language, and this should be the standard practice for any attorney drafting a community property trust which will include homestead property.

Text of Fla. Stat. § 736.151

Homestead property.—

(1) Property that is transferred to or acquired subject to a community property trust may continue to qualify or may initially qualify as the settlor spouses’ homestead within the meaning of s. 4(a)(1), Art. X of the State Constitution and for all purposes of general law, provided that the property would qualify as the settlor spouses’ homestead if title was held in one or both of the settlor spouses’ individual names.

(2) The settlor spouses shall be deemed to have beneficial title in equity to the homestead property held subject to a community property trust for all purposes, including for purposes of s. 196.031.

History of Fla. Stat. § 736.151

Fla. Stat. § 736.151 became law on July 1, 2021 as part of the Community Property Trust Act. It has not been amended or revised since that date.

This article is part of the PTM Legal Commentary to the Florida Trust Code. Click here to navigate through the entire commentary.