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Friday, February 23, 2018

Good News on Florida Homestead Protections

I had previously written that as part of the 20 year revision process, a proposal to reduce Florida's constitutional homestead protection against claims for creditors was advancing. That posting can be read here.

The good news (if you are in favor of vigorous homestead protections - not so good news if you are opposed to them) is that this provision was voted down before a subcommittee of the Constition Review Commission and is now a dead item. The deadline for new items has not yet expired so another or a revised proposal could surface, so the door is not yet fully closed, however.

Sunday, February 18, 2018

Updated Historical Federal Transfer Tax Rates, Exemptions, and Related Information Table

I have updated this table to include 2018 data based on inflation adjustments and changes in the 2017 Tax Act. The $11,180,000 exemption and exemption equivalent amounts for estate, gift and GST tax are not yet out, so estimates are used - final figures usually match these estimates but if the estimates are off, they shouldn’t be off by much. I will update the table to show the final values when they come out.

You can download the table here, and you can also access it any time from the link in the right-hand column under LINKS AND RESOURCES.

Sunday, February 11, 2018

No Homestead Treatment for Property Owned by a Corporation [Florida]

In a recent case, residential property was owned by a corporation. The sole shareholder and president of the corporation resided on the property, and the corporation had attempted to convey the residence to the shareholder, but its deed was effective and ineffective. In attempting to fend off a creditor, it was argued that the property qualified as homestead property and was thus beyond the reach of creditors, and the trial court agreed.

Article X, section 4 of the Florida Constitution, which provides protection against forced sale for homestead property, reads in relevant part:

There shall be exempt from forced 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. . . (emphasis added).

Since a corporation is not a natural person, that would seem to be the end of the argument that the property was homestead property. However, in Callava v. Feinberg, 864 So.2d 429, 431 (3rd DCA 2004), and other cases similar to it, property owned by a trust qualified as homestead property. Since a trust is not a natural person, why should ownership be a corporation be treated differently than a trust for this purpose?

In reversing the trial court, the 2nd DCA noted the crucial difference. In Callava, an individual beneficiary of the trust was found to hold an equitable interest in the subject property. Legal ownership was in the trust. Equitable ownership in a natural person is sufficient for these purposes – legal ownership is not required.

The problem for the shareholder in the instant case is that the shareholder had neither legal nor equitable/beneficial ownership, and thus the property did not qualify for homestead protection.

DeJesus v. A.M.J.R.K., 43 Fla. L. Weekly D331a (2nd DCA 2018).