Thursday, August 17, 2006

REVOCABLE TRUSTS AND HOMESTEAD CREDITOR PROTECTION [FLORIDA]

Under the Florida Constitution, an individual's homestead is generally exempt from the reach of his or her creditors. In 2001, the Bankruptcy Court for the Middle District of Florida held that if an individual transfers his or her homestead to a revocable trust (a common estate planning technique), this creditor protection is lost. Crews v. Bosonetto (In re Bosonetto), 271 BR 403 (Bakr. M.D. Fl. 2001).

Now, a different Bankruptcy Court judge, in the same Middle District, has held the opposite - that is, the homestead creditor protection remains available even though the owner transferred the homestead to a revocable trust for his or her benefit. In re Alexander, --- B.R. ----, 2006 WL 2055881(Bakr. M.D. Fl. 2006).

Does this mean that homesteads can be transferred to revocable trusts without fear of losing homestead protection? Nope - not yet anyway. Since the two courts are not appellate courts and are in the same District, neither decision has precedence over the year. However, if a an appeal is taken in Alexander, the decision of the appellate court should go a long way to providing a resolution of this issue (one way or the other).
Post a Comment