Thursday, September 5, 2013

Residence Held in Revocable Trust May Qualify as Florida Homestead

Miami Personal Bankruptcy Lawyer Jordan E. Bublick has over 25 years of experience in filing chapter 13 and chapter 7 bankruptcy cases. His office is in Miami at 1221 Brickell Ave., 9th Fl., Miami and may be reached at (305) 891-4055.  

In the case of In re Alexander, 346 B.R. 546 (Bankr.M.D.Fla.2007)(Williamson, J.), the court addressed the issue of whether real property may qualify for Florida's homestead exemption when title to the property is held in a revocable trust of which the Debtor is the sole trustee and the sole primary beneficiary. As sole trustee, the Debtor maintained legal control of the trust and could revoke the trust at any time and as sole primary beneficiary, the Debtor retained an exclusive right of possession. The debtor had resided in the residence for about ten years.

The court rejected the trustee's argument that the Debtor was not entitled to the homestead exemption on the contention that the real property was not "property owned by a natural person" as required by Art. X, Section 4 of the Florida Constitution. The court held that the Debtor's beneficial interest was sufficient to entitle her to claim Florida's homestead exemption. The court explained that the Florida Constitution has been interpreted as applying to a variety of interests in real property and does not distinguish different types of ownership interest that qualify for the homestead exemption. The court discussed that an individual claiming the homestead exemption need not hold fee simple title to the property, but it is sufficient if the individual's legal or equitable interest gives the individual the legal right to use and possess the property as a residence. In re Ballato, 318 B.R. 205 (Bankr.M.D. Fla. 2004), Southern Walls, Inc. v. Stilwell Corp., 810 So.2d 566 (Fla. 5th DCA 2002), Callava v. Feinberg, 864 So.2d 4290 (Fla. 3d DCA 2004), Engelke v. Estate of Engelke, 921 So. 2d 693 (Fla. 4th DCA 2006). The court declined to follow the case of In re Bosonetto, 271 B.R. 403 (Bankr.M.D.Fla.2001)(Proctor, J.)(debtor could not claim homestead exemption in residential property that she owned as trustee of trust) which it found did not cite any Florida cases to support its ruling and whose reasoning has not been followed in subsequent cases.