life-estateOne of the basic building blocks of Florida probate law is the “life estate” in homestead property all surviving spouses are entitled to.  The statutory basis for this rule is found in F.S. 732.401(1), which provides as follows:

(1) If not devised as authorized by law and the constitution, the homestead shall descend in the same manner as other intestate property; but if the decedent is survived by a spouse and one or more descendants, the surviving spouse shall take a life estate in the homestead, with a vested remainder to the descendants in being at the time of the decedent’s death per stirpes.

Pretty basic stuff for any Florida probate practitioner.  What may not be so simple is explaining the real life practicalities of a life estate to a surviving widow.  Which is why you may want to keep a copy of The New Homestead Trap: Surviving Spouses Are Trapped by Life Estates They No Longer Want or Can Afford handy.  In this just published article Ft. Lauderdale attorney Jeffrey A. Baskies does a good job of explaining the costs assumed by surviving spouses/life tenants, a point often overlooked by families and their advisers.

Costs Borne by Life Tenants

F.S. §738.801 provides in part that “the provisions of F.S. §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, §4 of the state’s constitution and F.S. §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).
  • The interest portion of mortgage payments, if any, on the property.
  • Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.
  • 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).

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 of the state’s two largest fiscal crises: the escalation in property taxes and homeowners’ insurance. In addition, costs of ordinary upkeep, interest payments on mortgages and, in many cases, virtually all of the special assessments are also the burden of the surviving spouse. Further exacerbating the situation, many widows live in communities which have charged (and are still charging) assessments to repair common areas damaged by the hurricanes the state faced these past few years — with the promise of active hurricane seasons for the foreseeable future.

While the surviving spouses have borne all of these huge increases in their costs of living, the remainder beneficiaries have seen property values double in most of the state (and increase three to five times in some areas) over the past five to 10 years. One hundred percent of that appreciation inures to the benefit of the remainder beneficiaries, while they are not forced to pay for any of these increased expenses.

Contrast the “rent free” use of the property by the widow with the “free ride” the remainder beneficiaries have had on property values, and ask who is being helped and who is being harmed by our homestead “protections”? The costs of property taxes and homeowners’ insurance have skyrocketed at the same time property values have appreciated at a meteoric pace. This situation has exposed in stark relief the discrepancy in treatment and benefits of surviving spouse life tenants and remainder beneficiaries.