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Florida Homestead

The Florida Homestead Law is one of the most powerful asset protection devices in the United States today. It is so powerful and desirable as an estate planning tool that many perpetrators of fraud and scams have brought their booty to Florida, purchased million-dollar homes for cash and then filed bankruptcy. Since the homestead property is excluded from bankruptcy (pursuant to Florida Homestead Law), the entire house passes outside of bankruptcy and all of the creditors pursuing the scam artists are left with nothing. After the bankruptcy Trustee issues the discharge order, the scam artist can sell the home and become an instant debt-free millionaire.

The homestead law provides a tremendous layer of creditor protection. Generally speaking, no creditor can touch or affect in any way the homestead of a person. This means that you can owe a debt and still own a home and not have the home affected in any way. Additionally, you can sell the home and buy a new home even though you owe the debt. The debtor cannot attach the home or the proceeds or any way affect this transaction. Some title companies cause major problems when this arises, but that is left for another chapter.

The Florida Homestead Law also provides another significant benefit. Anyone who owns a home receives a $25,000 reduction in the appraised value of the homestead property on which they must pay taxes. This reduction amounts to a savings of $300 to $500 a year on property taxes.

Florida Homestead arises from Article X, Section 4 (a), Florida Constitution:

1. "There shall be exempt from sale under process of any court, and no judgment, decree or execution shall be a lien thereon; except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:
   1. a homestead, if located outside a municipality, to the extent of 160 acres of contiguous land and improvements thereon, which shall not be reduced without the owner's consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of 1-1/2 acres of contiguous land, upon which the exemption shall be limited to the residence of the owner or his family;
   2. personal property to the value of $1,000.00.
2. These exemptions shall inure to the surviving spouse or heirs of the owner.
3. The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner's spouse if there is no minor child. The owner of homestead real estate, joined by the spouse if married, may alienate the homestead by mortgage, sale or gift and, if married, may by deed transfer the title to an estate by the entirety with the spouse. If the owner or spouse is incompetent, the method of alienation or incumbrance shall be as provided by law."