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David Toback, Attorney at Law
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Your Homestead Status Could Be at Risk in a Divorce

Most of us have heard of Florida’s strong homestead protections—specifically, that homestead property is exempt from creditors, both those that may appear during your life, and those that may make claims on your estate after you pass. The protection is in the Florida constitution and is one of the strongest protections that Florida residents have from creditors.

Divorce by itself doesn’t alter that protection. But it could. A recent case did allow homestead protection to apply after divorce, but the case is still a reminder of how important it is to mind those marital settlement agreements to make sure you’re not risking homestead protections.

Terms of Agreement Almost Waived Homestead

The case involved a man who passed, and whose only asset was his homestead. His children, of course, sought to invoke the constitutional protection from creditors.

The problem was that the marital settlement agreement (MSA) had a provision where the former wife had to sell the property after the children graduated high school. Thus, the personal representative of the estate argued that the homestead provision was waived, and the home should not have the homestead protection. In essence, the argument was that homestead had been waived, or otherwise was trumped by the contractual provision in the MSA.

On appeal, the appellate court agreed that the property did keep its homestead protection. The court noted that although the MSA did require that the property be sold at some point in the future, at the time of the father’s death, the property had not been transferred, and was not required to be, and thus, the property simply devised to the surviving parent, keeping its homestead status.

The court noted that in the past, where a party in a divorce doesn’t have possession or use of homestead property but an ex-spouse and a child of the marriage does pursuant to an MSA, the property retains its homestead status.

Florida law does allow a party to waive homestead rights by signing before two witnesses. But because the MSA only waived all claims or lawsuits as to each party, and waived any interest in the property of the other spouse, the court found that this was not sufficient to be considered a waiver of each party’s own property. Thus, the language in the MSA could not be construed to mean the deceased spouse had waved his own rights in the homestead property.

Be Wary of Language in an MSA

The court closely analyzed the language of the MSA, and it’s conceivable that had it been drafted differently (or, perhaps, been a stock MSA from a retail store or online “do it yourself” site), that the language may, in fact, have waived homestead protection. It’s another reason why if you have any assets at all, estate planning needs to be considered in the event of a divorce.

Divorce is always difficult, but good estate planning can make sure your intentions are fulfilled as to your property, and not lost to creditors. Contact Tampa business and probate attorney David Toback to discuss your needs and make sure you understand how life decisions can impact your ability to protect your assets.

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