Homestead in a Revocable Trust and a No-Contest Clause
Frank, a Florida resident, created a revocable trust in 2020 and transferred his homestead condominium and $2 million of securities into it. The trust provides that Frank receives all income during his life and may revoke. At death, the condominium passes to his second wife, Diane, for life, remainder to Frank's two adult children from his first marriage. The residue passes to Diane outright. The trust contains a no-contest clause stating that any beneficiary who challenges the trust forfeits her interest. Frank's 2019 will pours over to the trust but was not updated. Frank died in 2025 survived by Diane and the two children. The condominium was titled in the trust, and Frank had claimed it as homestead. Diane wants to sell the condominium and move to an apartment; the children object, claiming the trust violates homestead devise restrictions and that the no-contest clause is unenforceable. The trustee asks whether it can sell the homestead and distribute the proceeds.
1. Does the homestead devise in the revocable trust comply with Article X, section 4 of the Florida Constitution?
Read the worked answer
The 2018 amendment to Article X, section 4(c) allows a homestead to be devised in trust if the trust is for the benefit of the owner's spouse and/or descendants, the spouse has a right to occupy the homestead or the trust provides for distribution of income to the spouse for life, and the remainder passes to the owner's descendants. Here Diane receives a life estate in the condominium, which gives her a right to occupy, and the remainder passes to Frank's two adult children, who are his descendants. The trust therefore fits within the constitutional exception. The fact that the condominium is titled in a revocable trust does not defeat the devise; the trust became irrevocable at Frank's death. The children's argument that the trust violates the homestead restriction fails on these facts. If the trust had given Diane only a discretionary interest or had given the remainder to someone outside Frank's descendants, the analysis would be different.
2. Is the no-contest clause enforceable? How should the trustee respond?
Read the worked answer
Florida Statutes section 736.1108 provides that a provision in a trust purporting to penalize a beneficiary for contesting the trust is unenforceable. The no-contest clause is therefore void, and the children may challenge the trust without forfeiting their interests. The trustee should not use the clause to deter the children or to threaten forfeiture. Instead, the trustee should defend the trust on the merits, communicate with all qualified beneficiaries, and consider petitioning the court for instructions if the dispute threatens administration. The trustee's duty of impartiality under section 736.0803 requires it to weigh Diane's life interest and the children's remainder interest, not to take sides based on the invalid clause.
3. May the trustee sell the homestead and distribute the proceeds? What rights does Diane have?
Read the worked answer
The trustee's authority to sell depends on the trust instrument. If the trust grants a power of sale, the trustee may sell, but it must protect Diane's life estate and right to occupy. The trustee cannot sell free of Diane's interest without her consent, a release, or court approval. Because Diane wants to sell and move, she can consent to the sale and relinquish her right to occupy. The trustee can then sell the condominium and hold the proceeds in a separate trust for Diane's benefit for life, with remainder to the children. The proceeds substitute for the homestead in the trust, but the homestead exemption from forced sale may not continue automatically after sale; the trustee should consider whether reinvestment is appropriate. The children's objection does not prevent a sale if the trust authorizes it and Diane's rights are protected. The trustee should document the decision and account for the proceeds separately.