The homestead exemption does more than lower property taxes
Florida is famous for its sunshine, beaches, and retirement-friendly lifestyle. But there’s another benefit many homeowners don’t think about until it matters most: Florida’s homestead exemption. While many people are aware that it lowers property taxes, the homestead exemption also plays a significant role in estate planning. It can protect your home from creditors, but it can also limit how your home is passed on to your family when you die.
If you own a home in Florida, understanding the homestead exemption is crucial for making informed estate planning decisions. Here's what you need to know when devising an estate plan.
What is the Florida homestead exemption?
The Florida homestead exemption has two parts. First, there’s the property tax exemption. This reduces the taxable value of your home, helping you save money each year. Then there’s the constitutional homestead exemption, which provides powerful protections against creditors and places restrictions on how your home can be transferred at death.
To qualify, the home must be your primary residence. The exemption applies to up to half an acre of land if you live inside a city, or up to 160 acres if you live outside city limits. Because these rules come directly from Florida’s constitution, they are among the strongest in the nation and can’t be easily changed.
How does the homestead exemption protect property from creditors?
One of the biggest benefits of the homestead exemption is that it shields your home from most creditors. That means even if you rack up significant debt, your family home can't usually be forced into a sale to satisfy those debts.
There are some exceptions. Mortgages, property taxes, and liens for work done on the house are not protected. However, debts such as credit cards, medical bills, or judgments from lawsuits generally cannot be applied against your homestead.
For families, this protection is huge. If you pass away with outstanding debt, your spouse and children may still be able to keep the family home. Most creditors can’t force its sale.
How does the homestead exemption affect inheritance and transfers?
The same rules that protect your home also limit how it can be passed on after your death. Under Florida law, you can't freely leave your homestead to just anyone if you are survived by a spouse or minor child. If you have a minor child, the home must go to your spouse and/or children. You can't override this in your will.
If you have a spouse but no minor children, the spouse automatically has rights to the home. By default, they receive a life estate, but they can choose to take a one-half ownership interest instead. The other half goes to your children. If you have no spouse or minor children, you are free to leave the home to anyone you choose.
These restrictions often surprise people who assume they can leave their home however they want. In estate planning, failing to account for homestead rules can render carefully written wills or trusts ineffective.
What happens if the home passes to a surviving spouse?
When a spouse inherits a homestead, Florida law gives them a choice. They can accept a life estate, which allows them to live in the home for their lifetime, but they can’t sell it without the agreement of the children who inherit after them. Or they can choose a one-half ownership interest, which makes them co-owners with the children.
This setup often works smoothly in some families, but it can create tension in blended families. For example, a second spouse may want to stay in the home, while adult children from a first marriage want to sell and collect their share. These situations can easily lead to disputes and even lawsuits if the estate plan hasn’t accounted for them.
How does the homestead exemption impact blended families?
Florida’s homestead laws can complicate things for blended families. A surviving spouse may have the right to remain in the home, while children from a prior marriage are left waiting for their inheritance. In practice, this can create conflicts about upkeep, property taxes, or whether to sell the house.
Without careful planning, both sides may feel stuck. Children may resent not having access to their inheritance, while a surviving spouse may feel pressured or insecure. Estate planning that anticipates these issues (often through prenuptial agreements, trusts, or spousal waivers) can help prevent these painful conflicts.
Can you plan around Florida’s homestead restrictions?
You can plan around Florida's homestead restrictions, but it must be done carefully and in accordance with the state's laws. For example, a spouse can sign a waiver of their homestead rights in a prenuptial or postnuptial agreement for more flexibility in estate planning. In some cases, placing the home in a trust can provide better control over how the property is used or transferred, provided that the structure is properly set up to comply with the constitution.
Homeowners can also consider transferring ownership during their lifetime. However, this approach carries risks, including tax implications and potential effects on Medicaid eligibility. Any attempt to sidestep the homestead rules should be done with guidance from an experienced Florida estate planning attorney.
How does the homestead exemption affect Medicaid and elder care planning?
For seniors, the homestead is an important part of Medicaid planning. In Florida, your homestead is considered an exempt asset for Medicaid eligibility purposes. This means it won’t count against you when applying for long-term care assistance.
However, after your death, Medicaid may attempt to recover costs from your estate. Because the homestead has special protections, careful planning is needed to balance Medicaid eligibility, estate recovery, and your family’s inheritance rights.
What mistakes do people make with the homestead exemption?
Many mistakes arise from a misunderstanding of how broad the homestead exemption actually is. These mistakes can cause probate delays, family disputes, and unnecessary legal battles. Here's what to avoid:
- Thinking the homestead exemption only reduces property taxes, not realizing it limits inheritance rights.
- Leaving the home to someone in a will without realizing the transfer could be invalid if a spouse or minor child survives.
- Forgetting to update estate plans after major life events like marriage, divorce, or having children.
- Overlooking potential disputes in blended families.
Why do I need legal guidance from a Florida estate planning attorney?
If you’ve been putting off estate planning, now is the time to take control of your future and protect the people who matter most. The Levy Firm, PLLC helps Florida families create customized plans that safeguard assets, reduce taxes, and eliminate uncertainty. Whether you need to draft a will, set up a trust, protect your home under Florida’s homestead exemption, or prepare for medical and financial decisions, our team has the experience and expertise to provide you with peace of mind.
Serving Boca Raton, Palm Beach County, and communities across South Florida, The Levy Firm takes a personalized approach to every case. We understand that no two families are alike, which is why we listen carefully to your goals, explain your options, and develop a personalized strategy that puts you in control. We can help you prevent probate headaches, avoid family disputes, and protect your legacy while ensuring your loved ones are cared for in the way you intend.
Contact us today to schedule your free consultation. During your meeting, you’ll sit down with a skilled estate planning lawyer who will review your situation, answer your questions, and outline the options available to you. You’ll leave with a clear roadmap and the confidence that your future is in capable hands.
"Professional, very good work. I was well taken care of. I’d recommend The Levy Firm to anyone looking for a devoted and responsive firm." - D.D., ⭐⭐⭐⭐⭐