The Florida homestead exemption applies only for property owned by “natural persons.” Without diving into too much legalese, there was a decision by a bankruptcy court judge in a case called In re Bosonetto. In that case, the judge found that because the homestead in that case was held by a trust and not a “natural person”, the homestead protection did not apply.
On this basis, the court allowed a creditor to force the sale of the home in order to pay debts. This result is, of course, something to avoid as part of a complete Florida asset protection plan.
The good news is since Bosonetto, 5 Florida courts (2 of which were bankruptcy judges) have opted NOT to follow that case, and have expressly determined that property held in a revocable living trust is exempt from forced sale under Florida homestead laws.
1. Summarizing the pros and cons
1. It is often very advantageous to title a Florida homestead in a revocable trust due to the major benefit of avoiding the Florida probate administration process in favor of a much simpler Florida trust administration.
In addition, the flexibility of a revocable trust allows distribution planning options in the event of a special needs beneficiary in Florida OR if added protection is needed for IRA beneficiaries, estate planning in Florida for second marriages, and the list goes on.
2. Putting off probate
While joint title with right of survivorship or tenancy-by-the-entireties (husband and wife) property will pass to the surviving co-owner, you may only be putting off probate until the last co-owner dies.
Further, retitling the property could give friends and/or family an immediate interest in the property that can be rented, sold, or even worse used immediately!