Residual Devise vs. Homestead Laws

Author: LegalEase Solutions

QUESTION PRESENTED

Does the house at 4907 W. Bonanza need to be sold to satisfy the specific devise in the will?

SHORT ANSWER

A specific devise is a bequest intended to be specified out of a particular fund or account. The devise in the instant case is silent on the fund from which it is to be realized. The only available asset of the testator is said to be the house which is his homestead. The general rule in Florida is that the homestead is not an asset of the estate of the testator. But the courts recognize an exception to this rule. If the testator intended the homestead to be sold to achieve the interest of the estate, the protection on homestead will no longer be available. Thus, the sale of house at 4907 W. Bonanza depends on the determination whether the devise is specific and whether the homestead comes under the exception.

RESEARCH FINDINGS

Specific devise

“A specific legacy is a bequest of a specific article or of a particular fund which the will distinguishes from all the rest of the testator’s estate of the same kind.” In re Liljegren’s Will, 298 So. 2d 553, 556 (Fla. 2d DCA 1974) (internal quotations omitted).

Some examples of specific devises are “the devises of the four ‘Wizard of Oz’ plates to the daughter, a ‘marble bust of Michelangiolo’ to one nephew, and Mr. Savage’s ‘Grandpa, Joe O’Rourke’s Knight’s of Columbus Sword.’” Geezil v. Savage, 127 So. 3d 867, 868 (Fla. 2d DCA 2013).

On the other hand, “[a] general bequest is one which may be satisfied out of the general assets of the testator’s estate, instead of from any specific fund.” In re Estate of Lenahan, 511 So. 2d 365, 374 (Fla. 1st DCA 1987). Further, “[a] general bequest may comprise land, money, or intangibles, but has a prerequisite of designation by quantity or amount.” Id.

An example for the general devise will be the instance where the court concluded on the basis of the language of the will, “that the devise of an investment account to the daughter was a general devise, as was the devise of $2000 to one nephew.” Geezil, supra 127 So. 3d at 868.

“When property that has been specifically devised is no longer part of the testator’s estate at the time of his death, the devise fails or is ‘adeemed.’” In re Estate of Budny, 815 So. 2d 781, 782-83 (Fla. 2d DCA 2002) (quoting Estate of Murphy, 340 So.2d 107 (Fla.1976)).

In re Estate of Potter, 469 So. 2d 957 may aid in illustrating the treatment of general devises. In Potter, the testator amended her inter vivos trust cotemporaneous with her will providing the home to her daughter and an equivalent amount to her son. But, the assets were insufficient to pay the taxes, administrative expenses and the equivalent amount of cash to the son. The trial court ordered the sale of the residence and after paying taxes and administration expenses, to divide the remainder equally between the son and the daughter.

Order in which assets abate

(1) Funds or property designated by the will shall be used to pay debts, family allowance, exempt property, elective share charges, expenses of administration, and devises, to the extent the funds or property is sufficient. If no provision is made or the designated fund or property is insufficient, the funds and property of the estate shall be used for these purposes, and to raise the shares of a pretermitted spouse and children, except as otherwise provided in subsections (3) and (4), in the following order:

(a) Property passing by intestacy.

(b) Property devised to the residuary devisee or devisees.

(c) Property not specifically or demonstratively devised.

(d) Property specifically or demonstratively devised.

  • 733.805

In the instant case, the testator devised Two hundred and fifty thousand dollars ($250,000.00) to one of his sons, James Lee Neslund. But, the will is silent on the account from which the amount is to be paid. Further, the will devise “all the rest, residue and remainder of his estate to Philippe Neslund.” (Title VIII of the Will). The asset that remains in the estate is said to be the homestead of the testator. The Florida Constitution provides certain protection to homesteads. In the absence of a specific fund to realize the devise of $250,000 it is doubtful whether the devise can be treated as specific. A specific devise is the last to be utilized to pay debts, allowances and devises per § 733.805. But, in the absence of a specific fund to realize the amount, the devise might be treated as a general devise only. A general devise is to be satisfied from the general assets of the testator.

Protected homestead in Florida  

“Although section 731.201, Florida Statutes (2004), does not define homestead, it defines ‘protected homestead’ as that property described in the Florida Constitution ‘on which at the death of the owner the exemption inures to the owner’s surviving spouse or heirs.’” McKean v. Warburton, 919 So. 2d 341, 343 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006) (quoting § 731.201(29), Fla. Stat. (2004)).

“The Florida Constitution defines and protects homesteads in three distinct ways: it provides homesteads with an exemption from taxes; it protects homesteads from forced sale by creditors; and it places certain restrictions on a homestead owner from alienating or devising the homestead property.” Id., at 343-44 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006).

The reason behind the homestead exemption is summarized as:

As a matter of public policy, the purpose of the homestead exemption is to promote the stability and welfare of the state by securing to the householder a home, so that the homeowner and his or her heirs may live beyond the reach of financial misfortune and the demands of creditors who have given credit under such law.

Pub. Health Trust of Dade County v. Lopez, 531 So. 2d 946, 948 (Fla. 1988).

However, “[t]he primary objective in construing a will is the intent of the testator.” McKean, supra, 919 So. 2d at 344 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006).

“‘A specific legacy is a gift by will of property which is particularly designated and which is to be satisfied only by the receipt of the particular property described.’” Potter, supra, 469 So. 2d at 959 (Fla. 4th DCA 1985) (quoting In re Parker’s Estate, 110 So.2d 498, 500 (Fla. 1st DCA 1959)).

“In the absence of a specific devise, the [homestead] property may pass through the residuary, which is a sufficiently precise indicator of testamentary intent to pass protected homestead property.” McKean, supra, 919 So. 2d at 345 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006).

The difference between a general devise and residuary devise is as follows:

A general devise is one that may be satisfied in cash or in kind out of the general assets of the estate instead of from any specific fund, thing, or things. A residuary devise is a general devise where all of the other assets of the estate fall after all other devises have been satisfied and all charges, debts, and costs have been paid.

In re Estate of Mahaney, 903 So. 2d 234, 237 (Fla. 2d DCA 2005) approved sub nom. McEnderfer v. Keefe, 921 So. 2d 597 (Fla. 2006).

General rule on homestead property.

The general rule is that “[h]omestead property, whether devised or not, passes outside of the probate estate. Personal representatives have no jurisdiction over nor title to homestead and it is not an asset of the testatory estate.” Clifton v. Clifton, 553 So. 2d 192, n 3, 194 (Fla. 5th DCA 1989).

The following cases illustrate the general rule on homestead property:

“In Snyder, the decedent left a will devising cash gifts to her children. In the residuary clause of her will, the decedent left the rest, residue and remainder of her property to her granddaughter, Kelli Snyder.” McKean v. Warburton, 919 So. 2d 341, 345 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006) (citing Snyder v. Davis, 699 So.2d 999 (Fla.1997)).

“This Court concluded that any person to whom homestead property is devised under a will and who is categorized as an heir in the intestacy statute, regardless of whether that person would be next in line had the decedent died intestate receives protected homestead property under the Florida Constitution.” McKean v. Warburton, 919 So. 2d 341, 345 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006) (internal quotations omitted).

In re Estate of Mahaney, is another case where there was a specific cash gift and the residue of homestead. The facts of the case are as follows:

[T]he decedent expressed her intent to make a gift to McEnderfer [one of the defendant’s] in monetary terms, $30,000, and then used that gift as a reference to define the extent of her gift to Keefe [the other defendant], ‘my remaining residual estate.’ McEnderfer argued that the gift to her is a general devise that has priority over the gift to Keefe and therefore it should be funded by the sale of the decedent’s home before Keefe receives anything from the estate. Otherwise, her devise will fail while Keefe’s devise will be satisfied.

In re Estate of Mahaney, 903 So. 2d 234, 236 (Fla. 2d DCA 2005) approved sub nom. McEnderfer v. Keefe, 921 So. 2d 597 (Fla. 2006).

The court observed that “[n]otwithstanding the fact that homestead property may be devised, it does not become part of the probate estate subject to the control of the personal representative unless a testamentary disposition is made to someone other than an heir.” Id.

The court came to the conclusion that that “because Keefe was an heir, the property maintained its exempt status and never became property of the estate subject to the control of the personal representative.” Id. at 234.

The court certified “‘where a decedent is not survived by a spouse or any minor children, does decedent’s homestead property, when not specifically devised, pass to general devisees before residuary devisees in accordance with section 733.805, Florida statutes?’” Id., at 237-38.

The Supreme Court answered in the negative that “where a decedent is not survived by a spouse or minor children, the decedent’s homestead property passes to the residuary devisees, not the general devisees, unless there is a specific testamentary disposition ordering the property to be sold and the proceeds made a part of the general estate.” McEnderfer v. Keefe, 921 So. 2d 597 (Fla. 2006).

Exception to the general rule on homestead property

“The best, and perhaps the only, recognized exception to the general rule occurs when the will specifically orders that the property be sold and the proceeds be divided among the heirs.” In re Estate of Hamel, 821 So. 2d 1276, 1279 (Fla. 2d DCA 2002) (citing Knadle v. Estate of Knadle, 686 So.2d 631 (Fla. 1st DCA 1996).

In Knadle, the decedent’s will contained the provision that “[m]y Personal Representative shall sell my homestead as soon as reasonably practical and the net proceeds thereof shall be added to the residue of my estate.” Knadle v. Estate of Knadle, 686 So. 2d 631, 632 (Fla. 1st DCA 1996).

The Supreme Court of Florida discussed Knadle in McKean and held that “ where the will directs that the homestead be sold and the proceeds added to the estate, those proceeds are applied to satisfy the specific, general, and residual devises, in that order.” McKean v. Warburton, 919 So. 2d 341, 347 (Fla. 2005), as revised on denial of reh’g (Jan. 5, 2006).

In Cutler, the testator “directed that her debts be satisfied equally from both properties should the funds in her estate be insufficient to satisfy those debts.” Cutler v. Cutler, 994 So. 2d 341, 343 (Fla. 3d DCA 2008). The majority held that “[a]lthough [the testator] did not direct that her home be sold, she did direct, in a specific manner, that it be used to satisfy her debts. This was the equivalent of ordering it sold and the proceeds distributed to pay debts …” Cutler v. Cutler, 994 So. 2d 341, 345 (Fla. 3d DCA 2008).

Further, “‘[w]hen a will devises estate property to a person, expressing the testator’s hope that the person ‘will honor all of [the testator’s] ‘requests,’ then ‘the unambiguous language of the [will] devises the entire residuary to [that person], who then has the discretion to honor [testator’s] requests.’” Cody v. Cody, 127 So. 3d 753, 757 (Fla. 1st DCA 2013) (quoting Glenn v. Roberts, 95 So.3d 271, 273 (Fla. 3d DCA 2012)).

In the instant case, the testator has devised “all the rest, residue and remainder of his estate to Philippe Neslund.” (Title VIII of the Will).  If the general rule as illustrated in Snyder and In re Estate of Mahaney is to be followed, then the homestead property is protected from alienation.

But, Title IX of the Will has declared Philippe Neslund as the Personal Representative of the estate of the testator. He has been ‘authorized and empowered to sell and convey all or any part of the estate, which may deem advisable for the best interest of the estate.’ Thus, if this provision is to be interpreted as the authority to sell the homestead property, as in Knadle and Cutler, then the protection of homestead property will not be available.

CONCLUSION

Specific devises generally require a specific fund to realize the amount. In the absence of a specific fund to meet the specific devise, the devise of $250,000 might be treated as a general devise only. Similarly, if the recitals in Title IX of the Will are interpreted to mean the permission to sell the house, then the house will not come under the definition of a ‘protected homestead.’ It can be sold to meet the recitals of the Will including the devise of $250,000.