3d DCA: Can husband and wife waive homestead rights by merely signing a joint deed?
Habeeb v. Linder, --- So.3d ----, 2011 WL 613392 (Fla. 3d DCA Feb 09, 2011)
UPDATE: This case was settled, prompting the 3d DCA to enter this order withdrawing its opinion. Trust and estates lawyer extraordinaire, Jeff Baskies, once again provides excellent commentary on this turn of events and what it all means for Florida homestead law.
Under Florida law a surviving spouse's rights in the couple's marital homestead residence are spelled out in Art. X, § 4(c) of the Florida Constitution, and F.S. 732.401. Spouses are free to contractually waive these rights, and often do for estate planning purposes (especially in second marriages where each spouse has children from a prior marriage). The specific statutory authority governing these types of estate planning marital agreements is found in F.S. 732.702. This statute is often the subject of litigation (and commentary on this blog, click here, here, here), and is at the heart of the linked-to opinion above.
The 3d DCA's opinion in this case has caused quite a stir in estate planning/probate circles. (For an excellent discussion see Jeff Baskies' commentary). Why? Because it's a great example of how NOT to draft a valid marital agreement under F.S. 732.702, and yet the court upheld the contested homestead-waiver. What happened?
The 3d DCA was asked to decide if a store bought form deed signed by a husband and wife could qualify as a valid marital agreement under F.S. 732.702, resulting in a valid waiver of the husband's homestead rights. There were two pivotal issues at play in this case:
[1] Fair Disclosure?
A homestead-waiver agreement executed after a couple has married is not valid unless each spouse provides the other with "fair disclosure" of his or her assets or "estate". F.S. 732.702(2). There was no formal financial disclosure between the spouses in this case. At issue was whether "fair disclosure" could be inferred from the facts and circumstances of their long-term marriage. Both the trial court and the 3d DCA said YES based on the following record:
[1] The 1979 deed was signed by both spouses many years into a long-term marriage and at a time when both occupied the condominium in question. [2] The deed was prepared for them by a Florida attorney. [3] Each spouse signed the instrument before two subscribing witnesses and a notary public. [4] The spouses also later prepared last wills and testaments reflecting the intended disposition of their respective assets based on the assumption that the 1979 deed effectively relinquished Mitchell's property rights, including homestead interests, in the condominium.
[5] A month after Virginia passed away in November 2008, Mitchell executed under oath a petition for administration of Virginia's estate and a petition to determine the continued homestead status of the condominium property. These documents further illustrated Mitchell's understanding that the 1979 deed had validly transferred all of his rights in the property to Virginia at that time, with the result that the devise of the property in her later will was also valid and effective.FN3
[6] FN3: Only when Mitchell passed away in January 2009 was it suggested that the 1979 deed failed to relinquish to Virginia, or waive, Mitchell's homestead rights.
From this record, the trial court properly concluded that the spouses made “fair” disclosure to each other, and there is certainly no evidence to the contrary.
By the way, there's all sorts of good law that says fair disclosure in the marital agreement context can be inferred from the facts and circumstances. See, e.g., Del Vecchio v. Del Vecchio, 143 So.2d 17 (Fla. 1962) (Basic issue as to validity of antenuptial agreement is concealment, not absence of disclosure by husband, and wife may not repudiate it if she is not prejudiced by lack of information.)
If you're drafting a marital agreement you NEVER want to rely on facts and circumstances to uphold the validity of your client's document; but if you're a litigator trying to uphold an improperly drafted agreement in court, the facts and circumstances of the couple's relationship just might win the day for you. It worked in this case.
[2] Legally Sufficient Waiver?
A homestead-waiver agreement is valid if it provides for a waiver of "all rights" or equivalent language. The form deed signed by the couple in this case way back in 1979 was described as follows by the 3d DCA:
The warranty deed, a “Ramco Form 01,” was a pre-printed form widely used by Florida practitioners in the days when “word processors” were human typists rather than compact machines.
Needless to say, the deed didn't contain any explicit homestead waiver language, but it did contain sweeping, boilerplate transfer language you find in old forms (such as a conveyance of all “heriditaments”). At issue was whether this sweeping boilerplate language satisfied the statute's waiver requirement. Again, both the trial court and the 3d DCA said YES. Here's an excerpt of the 3d DCA's analysis:
In this case . . . section 732.702 provides . . . specific guidance regarding the waiver of the particular constitutional rights involved, namely, the constitutional rights of one spouse in a marital homestead. The statute establishes, and the warranty deed satisfied, the requisite elements of a valid waiver as a matter of law.
The statute itself contemplates that a “written contract, agreement, or waiver” may be used to memorialize a relinquishment of a spouse's homestead rights. These alternatives demonstrate that “waive” is not a talismanic word within the statute, so that a contract or agreement may accomplish the same result. Neither the statute nor any interpretation of the statute supports the appellant's argument that Mitchell was required to execute a second “contract, agreement, or waiver” after (1) title had vested exclusively in Virginia's name, (2) she “formed the intention that the property would be her domicile or permanent residence,” and (3) he survived her. To the contrary, the Florida Supreme Court has concluded that a spouse's single agreement under section 732.701(1) “is the legal equivalent of predeceasing the decedent, for purposes of article X, section 4(c).” City National Bank of Florida v. Tescher, 578 So.2d 701, 702 (Fla.1991). In that case, as here, the surviving spouse had waived homestead previously and no minor children survived the decedent.
. . .
Article X, section 4(c) of the Florida Constitution expressly authorizes a husband and wife to alienate their homestead property “by mortgage, sale or gift,” and that is what both spouses did in 1979. In this case the term “heriditaments” in the 1979 warranty deed encompasses the homestead rights of each grantor as survivor. The term includes “anything capable of being inherited, whether it is corporeal, incorporeal, real, personal, or mixed.” 42 Fla. Jur.2d Property § 7 (2010).
The best way to make sense of this opinion is to read it from a litigator's point of view, not as an estate planner:
For litigators, this case underscores a truism that's repeated so often it's become a cliche: trials turn on their facts, not abstract legal principles. The winning side in this case put on a compelling, fact-intensive case, that compensated for the obvious legal deficiencies created by the couples' reliance on a store bought form document executed over 20 years ago.
For estate planners, the take-away from this case is that the family could have avoided the rancor, costs and delays inherent to any estate dispute pitting family members against each other with a minor investment in competent estate planning back in 1979, versus pouring huge sums of money into a trial and appellate proceeding in 2011. Whatever this litigation cost the family, I can guarantee you it's several orders of magnitude greater than what husband and wife would have paid a qualified estate planner back in 1979 to properly document their intended homestead waiver.
For example, if your estate consists of $100,000 and the costs of administering your estate, taxes, and creditor claims all add up to $50,000, your heirs only get $50,000. Things get tricky when estates are insolvent. Assume again your estate has a value of $100,000, but the debts of your estate amount to $120,000. In that case your heirs get nothing and the estate's administration expenses, taxes and creditor claims are paid in the order of priority listed in 
If all trustees had to do was worry about maximizing investment returns, that would be hard enough. But we all know it's a lot more complicated than that. Why? Because trustees also have simultaneous and equally important duties to make sure their trusts are generating enough cash to provide for their current beneficiaries' immediate payment needs while also ensuring trust assets are properly preserved for remaindermen [
