The new homestead trap: surviving spouses are trapped by life estates they no longer want and can no longer afford.

• Author: Baskies, Jeffrey A.
• Position: Florida

Florida's homestead laws have created a new trap for surviving spouses--the life estate that was designed to protect them has instead trapped them in homes they no longer want and can no longer afford.

This situation has become acute as a result of the convergence of several developments over the past five years. There has been a tremendous increase in property taxes statewide. While many homesteads have benefited from the "save our homes" cap on ad valorem property taxes, for those that were purchased in the last few years, the base for property taxes may already be inflated. (1) Homeowners' insurance costs for everyone have increased as much as several hundred percent. For many surviving spouses, there have been special assessments for condo and homeowners' associations for hurricane damage. For those in single family homes, many have had to pay for significant repairs not covered by insurance. Floridians benefiting from the "save our homes" cap on their property taxes have a generalized fear of moving, because to do so could result in significantly increased taxes as a result of purchasing a new home (even a less expensive one). Finally, as a result of increased property values, many surviving spouses who want to move fear they cannot find a reasonable alternative place to live.

Combined, these factors have created a difficult situation for many Florida residents. But, when coupled with an inability to alter or sell their life interests, many surviving spouses are trapped in their homesteads. If they no longer desire to live in their homes or they can no longer afford to do so, what can they do and where can they go?

Florida case law affords no relief for life tenants who want to move. There is neither a suitable remedy nor any means to sever the tenancies. To make matters worse, the Florida Statutes have become even more onerous for life tenants, not only causing them to bear 100 percent of the property taxes and insurance costs, but also virtually 100 percent of all assessments for repairs and improvements as well.

Thus, as property values have soared--to the benefit of the remainder beneficiaries--the costs of maintaining the properties have also soared--to the detriment of the life tenants--with no relief in sight for the life tenants. This situation has created significant inequities in the life tenant and remaindermen relationships.

Costs Borne by Life Tenants

F.S. [section]738.801 provides in part that "the provisions of F.S. [section]738.701-738.705... shall govern the apportionment of expenses between tenants and remaindermen when no trust has been created...." In the absence of some agreement, those provisions apply to all life estate/remainder situations created by the Florida homestead laws (created by the constitutional restrictions on devise in art. X, [section]4 of the state's constitution and F.S. [section]732.401).

Taken together, these statutes require the life tenant to pay:

* All of the ordinary expenses incurred in connection with the administration, management, or preservation of property, including ordinary repairs (including condo or homeowners' association maintenance charges) and regularly recurring taxes (ad valorem property taxes). (2)

* The interest portion of mortgage payments, if any, on the property. (3)

* Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset. (4)

* The costs of, or special taxes or assessments for, an improvement representing an addition of value to property shall be paid by the tenant when the improvement is not reasonably expected to outlast the estate of the tenant. In all other cases, a part only shall be paid by the tenant, ascertainable based on the present value of the tenant's estate (actuarially). (5)

Thus, surviving spouses--who are ostensibly "protected" by the Florida Constitution and statutes (given the "right" to live "rent-free in a homestead")--are required to bear 100 percent of the burden...