Many Florida homeowners create a revocable living trust to simplify the administration of their estate and help their families avoid probate. A common question I hear is whether placing a home in a trust will also prevent the property taxes from increasing after the owner dies.
The short answer is: not necessarily.
A trust can be an important estate-planning tool, but it does not automatically preserve the deceased owner's property-tax assessment for the next beneficiary. Florida's property-tax rules focus on ownership, beneficial interests, homestead eligibility, and the identity of the person receiving the property.
Understanding Florida's Save Our Homes Benefit
Florida's Save Our Homes assessment limitation generally restricts annual increases in the assessed value of homestead property to the lesser of 3 percent or the applicable change in the Consumer Price Index. This limitation can create a significant difference between a home's market value and its lower assessed value over time. (See FL Stat 193.155)
When a qualifying change of ownership occurs, the property is generally reassessed at just value as of January 1 of the year following the ownership change. The new owner may apply for a homestead exemption, but the prior owner's accumulated Save Our Homes benefit does not automatically carry forward.
It is also important to understand that retaining a capped assessed value does not guarantee that the actual tax bill will never increase. Millage rates, special assessments, changes in exemptions, and qualifying additions or improvements to the property may still affect the amount due.
Does a Revocable Trust Prevent Reassessment?
A family reviews plans for preserving a Florida home and preparing for future ownership and property-tax considerations.
Transferring a homestead into a properly structured revocable living trust during the owner's lifetime may not constitute a change of ownership when the same person remains entitled to the homestead exemption and retains the appropriate beneficial interest.
However, what happens after the owner's death is a separate question. At death, the trust may direct that the home pass to a new beneficiary. If that transfer changes the legal or beneficial ownership and no statutory exception applies, the county property appraiser may reassess the property at its current just value.
In other words, the trust itself does not freeze the property taxes. The result depends on the trust language, the beneficiary receiving the property, the beneficiary's occupancy and homestead status, and Florida's change-of-ownership exceptions.
Replacement Section: When Might Property Taxes Not Increase After Death?
Although the death of an owner often results in a transfer of ownership, not every transfer triggers a reset of the property's assessed value. Section 193.155 of the Florida Statutes identifies several transfers that are not treated as a “change of ownership” for Save Our Homes purposes.
The following examples illustrate how these exceptions may work.
Example 1: A home passes to the surviving spouse through a trust
Maria owns and occupies a homestead property in Miami Lakes. Her revocable trust provides that, at her death, her spouse will receive the home. The spouse continues living in the property and remains eligible for the homestead exemption.
A transfer to a surviving spouse is generally excluded from the statutory definition of a change of ownership. As a result, the transfer may not cause the assessed value to reset to the home's current market value.
The trust does not create the property-tax protection by itself. The relevant protection arises from the surviving-spouse exception.
Example 2: Spouses own the home as tenants by the entirety
A married couple owns a Florida homestead as tenants by the entirety. After one spouse dies, the surviving spouse becomes the sole owner and continues to occupy the residence as a permanent home.
Because the transfer is to a surviving spouse, it may fall within the spousal exception to reassessment.
This example also illustrates why the deed matters. The property-tax analysis should consider how title was held immediately before death, not merely what the will or trust says.
Example 3: Homestead passes by law to a surviving spouse or minor children
Suppose a homeowner dies while survived by a spouse or minor children. Florida's special homestead rules may cause the property to pass by operation of law, regardless of conflicting language in a will or trust.
A transfer by operation of law to a surviving spouse or minor child or children under section 732.401 is excluded from the definition of a change of ownership for Save Our Homes purposes.
This exception is especially important because Florida homestead property is subject to constitutional and statutory restrictions that do not apply to every other estate asset.
Example 4: A dependent adult child lives in the home
Robert owns a homestead property, and Robert's adult child has lived in the home permanently for several years. Because of a disability or another qualifying circumstance, the child is legally or naturally dependent on Robert. After Robert's death, the home passes to that child.
Florida law provides a potential exception when the recipient was both:
- A permanent resident of the property; and
- Legally or naturally dependent upon the deceased owner.
If both requirements are satisfied, the transfer may not trigger reassessment.
Living in the house alone is not necessarily sufficient. Likewise, receiving financial assistance without permanently residing in the home may not satisfy the exception. The family should be prepared to document both residency and dependency.
Example 5: A dependent parent permanently resides with the owner
The dependency exception is not written exclusively for children. Consider a homeowner whose parent permanently occupies the property and is legally or naturally dependent upon the homeowner. If the homeowner dies and the property transfers to the dependent parent, the transfer may qualify for the same exception.
Whether dependency exists is fact-specific. The source of financial support, the recipient's residence, the ownership documents, and the circumstances existing at the time of death may all be relevant.
Example 6: Two owners already receive the homestead exemption
Two individuals own and permanently occupy a home as joint tenants with rights of survivorship. Both are already entitled to and receiving the homestead exemption. One owner dies, and the surviving owner continues to live in the property and receive the exemption.
Florida law provides an exception when:
- The owners held title as joint tenants with rights of survivorship;
- One or more owners received the homestead exemption;
- One or more owners died; and
- The surviving owner or owners who previously received the exemption continue to qualify for it.
Under those circumstances, the death may not cause a full reassessment.
Example 7: Three qualifying joint owners become two
Assume three family members own a homestead as joint tenants with rights of survivorship. All three permanently reside in the home and receive the homestead exemption. One owner dies, while the other two remain in the residence and continue to qualify.
The statutory joint-owner exception may preserve the existing assessment because the surviving owners were already receiving the exemption and continue to do so after the death.
Example 8: Only part of the property may remain protected
In some cases, different owners hold separate percentage interests in a property. Florida law states that when a person receives a homestead exemption only on that person's proportionate interest, the Save Our Homes limitation applies only to that interest.
For example, if a surviving co-owner previously received homestead protection on only a one-half interest, the property appraiser may need to analyze the surviving owner's protected interest separately from the inherited interest. A family should not assume the entire parcel will receive identical treatment.
Examples That Commonly Do Not Preserve the Prior Assessment
The following situations may result in reassessment unless another exception applies:
- A home passes to an adult child who did not permanently reside with or depend upon the deceased owner.
- A trust leaves the home equally to several adult children who plan to use it as a vacation property.
- A beneficiary inherits the property but rents it to someone else.
- A relative moves into the home only after the owner's death.
- A joint owner survives but was not previously entitled to and receiving the homestead exemption.
- The trust gives one person temporary occupancy while transferring the beneficial ownership to different beneficiaries.
These examples emphasize an important point: avoiding probate is not the same as avoiding property-tax reassessment. The county property appraiser examines the legal and beneficial ownership of the property, the applicable homestead exemption, and the facts surrounding the transfer.
Practical Takeaways
Before relying on an exception, families should:
- Review the current deed and the complete trust agreement.
- Identify who holds legal and beneficial ownership after death.
- Confirm who was receiving the homestead exemption before the owner died.
- Determine whether the recipient was already a permanent resident.
- Preserve evidence of dependency when relying on the dependent-resident exception.
- Apply promptly for any available homestead exemption.
- Request guidance from the county property appraiser concerning the specific transfer.
- Coordinate the property-tax analysis with the estate plan before changing the deed or trust.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship between you and Gold Legacy Law. For legal advice regarding your personal situation, please contact our office to schedule a consultation.
