Will Execution: A Will’s Express Directions May Compromise Homestead Protection
September 3, 2008
Edith Cutler had created a land trust for estate planning purposes where she conveyed her residence, as well as an adjacent vacant lot, to the trust subject to a life estate that she retained for herself. Under the trust, the remainder of the interests in the properties was to be distributed to Edith’s estate upon her death.
Edith’s Will specifically devised the residence to her daughter and the adjacent vacant lot to her son. The Will further provided that if the funds of Edith’s estate were insufficient to eliminate her debts, both properties should be used equally to satisfy the debts. Following her death, the estate funds were insufficient to satisfy all of her creditors.
The son wanted to have both properties used equally to pay off his mother’s debts but the daughter objected, claiming that the residence was exempt from creditors because it retained its homestead status, even though it was titled in the name of the trust at the time of Edith’s death. The trial court agreed.
The appellate court agreed that the residence retained its homestead status despite it being titled in the name of the trust at the time of Edith’s death. However, the appellate court declined to allow the constitutional exemption from creditors’ claims in a manner which would benefit Edith’s daughter.
The appellate court held that Edith’s express wish that her residence be used to satisfy her debts was equivalent to ordering the residence sold and the proceeds used to satisfy her debts. Following that line of reasoning, the court determined that the residence was ultimately not protected from creditors.
The Catch…What you need to know is that a Will’s express wish and direction to use a homestead property in order to satisfy debts compromises the homestead property’s protection against creditors.
Cutler v. Cutler, 994 So. 2d 341 (Fla.App. 3 Dist. 2008).
Edith Cutler had created a land trust for estate planning purposes where she conveyed her residence, as well as an adjacent vacant lot, to the trust subject to a life estate that she retained for herself. Under the trust, the remainder of the interests in the properties was to be distributed to Edith’s estate upon her death.
Edith’s Will specifically devised the residence to her daughter and the adjacent vacant lot to her son. The Will further provided that if the funds of Edith’s estate were insufficient to eliminate her debts, both properties should be used equally to satisfy the debts. Following her death, the estate funds were insufficient to satisfy all of her creditors.
The son wanted to have both properties used equally to pay off his mother’s debts but the daughter objected, claiming that the residence was exempt from creditors because it retained its homestead status, even though it was titled in the name of the trust at the time of Edith’s death. The trial court agreed.
The appellate court agreed that the residence retained its homestead status despite it being titled in the name of the trust at the time of Edith’s death. However, the appellate court declined to allow the constitutional exemption from creditors’ claims in a manner which would benefit Edith’s daughter.
The appellate court held that Edith’s express wish that her residence be used to satisfy her debts was equivalent to ordering the residence sold and the proceeds used to satisfy her debts. Following that line of reasoning, the court determined that the residence was ultimately not protected from creditors.
The Catch…What you need to know is that a Will’s express wish and direction to use a homestead property in order to satisfy debts compromises the homestead property’s protection against creditors.
Cutler v. Cutler, 994 So. 2d 341 (Fla.App. 3 Dist. 2008).