Who Owns the Homestead Upon Death When There is a Surviving Spouse AND a Marital Settlement Agreement with a Prior Spouse? ?
Florida homestead is a very specific legal term and with it comes many favorable attributes, one of which is that, if properly devised, the homestead is not subject to a decedent’s creditors. For example Mom devises homestead to Son. At her death Mom had $20,000 in American Express bills. Son gets homestead free and clear of American Express bills. But what happens if the homestead is subject to a prior marital settlement agreement (“MSA”)?
In Friscia v. Friscia, the Second DCA determined that, while the favorable homestead creditor protection would inure to a spouse and children, the homestead was still subject to the terms of an MSA.
Vincent Friscia divorced Robin in 2008. Vincent died in 2011 and survived by his second wife, Nora. The MSA provided that the homestead was owned jointly with Robin as tenants in common, but Robin had “exclusive use and possession ” until their youngest child graduated from high school, at which time the house would be listed for sale and the proceeds divided equally between Vincent and Robin . Robin had the option to purchase Vincent’s share.
After Vincent’s death, because there were not enough assets to pay debts and creditors and because Vincent died without a will, Vincent’s son filed a petition to determine homestead status alleging that Vincent’s share of the homestead should be distributed life estate to Nora, remainder to Vincent’s children pursuant to Section 732.401 of the Florida Statutes and thus be protected from Vincent’s creditors.
Robin objected and argued that Vincent waived all rights to the homestead in the MSA. The court determined that Vincent’s share WAS homestead and the distribution of homestead (life estate to Nora, remainder to Vincent’s children) was correct. HOWEVER, such distribution of homestead did NOT “negate the terms of the MSA”. The terms of the MSA provided that the MSA was binding on heirs, etc. Thus, the children and Nora were also bound by the MSA. Thus, Nora, while owning a life estate in the homestead, the “occupancy, sale , and option to buy provisions of the MSA” result in Nora having a life tenancy in name only.
ADVICE: Homestead is NOT as easy as some people think. You must analyze the homestead disposition at death and you MUST consider outstanding agreements that may affect the homestead devise. You should ALWAYS ask the question whether there is a marital agreement from a prior divorce and read it.
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