Stone v. Stone

Stone v. Stone, 157 So.3d 295 (2014), 2014 WL 5834826

Another homestead decision!  This time, the Court made two interesting holdings concerning homestead, QPRTs and a spouse's ability to waive homestead rights: (1) When a homeowner transfers property to a QPRT pursuant to F.S. 732.4017, and the property reverts back to the homeowner's estate because the homeowner failed to survive the term of the QPRT, a subsequent disposition of the property pursuant to the homeowner's will is a devise, subject to Florida's constitutional homestead devise restrictions and (2) The joinder of the homeowner's spouse on a deed transferring homestead property will constitute a valid waiver of homestead rights even if the deed contains no waiver language.

Like the last homestead decision, it is helpful to map out the transfers which occurred:
(1)  Husband and wife own homestead property.
(2)  Husband and wife execute warranty deed conveying property to themselves as tenants in common, each as to an undivided one-half interest.
(3)  Husband executes QPRT and executes warranty deed conveying his one-half tenancy in common interest in the property to husband and wife as co-trustees of the QPRT.
(4)  Wife executes QPRT and executes warranty deed conveying her one-half tenancy in common interest in the property (wife's one-half interest was not the subject of the appeal).

The husband died before the term of the QPRT expired, and thus his one-half interest in the property reverted to his estate.  Pursuant to the terms of his estate plan, the property was held in trust for the wife's benefit for her life, and upon the wife's death passed to his daughter.  

The Court held that there were two distinct transfers: (1) the transfer of the husband's interest in the property to the QPRT and (2) the transfer of his interest in the property to the daughter.  It held that the transfer to the QPRT was not a devise but the second transfer should have been treated as devise.

The transfer to the QPRT was not considered a devise because pursuant to F.S. 732.4017(1), an inter vivos transfer of homestead property to a trust will not be treated as a devise so long as the settlor does not retain a power to revest the property in himself.  The Court found that the fact that the husband retained an interest in the property in the form of the possibility of a reverter (in the event that he did not survive the term of the QPRT) does not put the QPRT outside the parameters of F.S. 732.4017.  It also noted that F.S. 732.4017 can be applied retroactively, since the statute expressly states that it was intended to clarify existing law.

The transfer of the husband's interest in the property to his daughter after his death was considered a devise because the husband did not outlive the term of the QPRT and thus the transfer of the property was not completed pursuant to the terms of the trust as permitted by F.S. 732.4017.  Since the QPRT did not ultimately control the disposition of the property at the time of the husband's death, and the property instead reverted back to the husband's estate and passed to the daughter through the terms of his will, the Court held that the transfer was a devise, subject to the constitutional homestead devise restrictions.

Despite finding that the transfer to the daughter was a devise subject to the constitutional homestead devise restrictions, the Court also held that the wife had waived her homestead rights for the purpose of those restrictions and therefore the disposition of the residence was not in violation of those restrictions.  The fact that she continued to claim a homestead exemption from ad valorem taxation did not mean that she did not intend to waive her constitutional homestead rights for purposes of devise.

Thus, the Court held that since there were no surviving minor children, and the wife had waived her homestead rights, the husband was free to devise his interest in the homestead property without any constitutional restriction, and thus the devise to the daughter after his death was valid.

For an in depth discussion of the waiver issue, please see the discussion of this decision on Rubin on Tax.

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