Homestead Exemptions and Living Trusts: a Look at California, Florida, and Texas

The information presented in this article is not all-encompassing, nor is it meant to be construed as professional legal advice. Because homestead exemption laws are complicated, consult a qualified attorney with questions regarding homestead exemptions and living trusts in your state.

Via Black’s Law Dictionary, 8th ed., a homestead is “[t]he house, outbuildings, and adjoining land owned and occupied by a person or family as a residence. As long as the homestead does not exceed in area or value the limits fixed by law, in most states it is exempt from forced sale for collection of a debt.” A homestead can only be designated in one jurisdiction, generally where the owner maintains permanent residence.

The body of homestead law quickly becomes confusing because there are frequently separate sets of legal rights pertaining to permanent address falling under the umbrella of “homestead.” Aside from asset protection, homestead exemption law also includes property tax relief and protection for surviving spouses. As the American Bar Association notes, since most states only allow exemption claims against judgment debts, and not tax debts or voluntary mortgages, Americans rarely encounter homestead exemptions outside of bankruptcy [1].

This article will focus only on the homestead exemption in the context of bankruptcy, where homestead property is protected from seizure to fulfill a judgment debt (the asset protection aspect of homestead law). Homestead exemption laws do not provide protection pursuant to mortgage foreclosure, mechanic’s liens, or unpaid taxes. Judgment debtors (homestead claimants in bankruptcy, generally) can choose between their state’s exemption [1] and the homestead exemption offered by federal law 11 U.S.C. 522, which places a limitation at $125,000 “if the homestead was acquired within 1,215 days (about 40 months) of the filing of the bankruptcy petition” [2].

Homestead laws vary from state to state; in some states, debtors’ protection via homestead exemption is limited up to a specific dollar amount, and in others, up to a specific number of acres. Exemptions may double for married couples, or include equal protection for individuals, as in Arizona.* Some states have no existing homestead asset protection statutes for debtors, but offer homestead tax credits; depending on where you live, these homestead exemption benefits may be automatic, or require application and approval for qualifying property.
*Under A.R.S. 33-1101, Arizona provides the same $150,000 exemptions for both married spouses and singles.

Generally, homestead exemption claims in judgments end in one of two ways: When the exemption is greater than or equal to the value of the homestead, the property cannot be forcibly sold. When the exemption is less than the value of homestead, the property may be sold, with the homestead holder receiving proceeds in the amount of up to the value of the exemption [1].


For estate planning purposes, some people transfer their real property interests into a revocable living trust, but these situations may lead to complications. Take time to understand the laws concerning the rights of homestead property owners in the relevant state, and whether those rights change once property is placed in trust.

Do the protections of a homestead exemption cease to exist when homestead property is transferred into a living trust? The short answer is that this depends on many conditions, not the least of which is the location of the homestead property. In some states, the matter is addressed directly by statute.* In others, precedent is set largely through case law and is ongoing. The best bet in all cases is to consult a local attorney who specializes in estate planning.
*New Hampshire specifically addresses that homestead rights not lost when homestead transferred to trustee of a revocable trust (RSA 480:9).

According to the American Bar Association, putting your home in a revocable trust might jeopardize a homestead exemption, among other potentially unintended consequences [3]. To provide a glimpse of the variations of homestead exemption law and how the law is construed for homestead property in trust, we’ll take a brief look at the legislation in Texas, Florida, and California.


Under Tex. Prop. Code Section 41.001(a), “A homestead and one or more lots used for a place of burial of the dead are exempt from seizure for the claims of creditors except for encumbrances properly fixed on homestead property.” Case law has construed the Texas homestead exemption quite broadly, with varying interpretations of what qualifies as a “homestead.”

In Texas, the homestead exemption is unlimited as to value, but limited as to acreage; for an urban homestead (property located within municipality limits), no more than 10 acres are exempt. For a rural homestead, 200 acres are allotted for families, and 100 acres for individuals (Tex. Prop. Code 41.002). Texas law also includes a six-month protection from creditors of proceeds of a sale of a homestead for homestead claimants (41.001(c)); case law suggests the execution of this protection has been generally inconsistent [4].

Tex. Prop. Code Section 41.0021(b) addresses homestead property in qualifying trusts:
Property that a settlor or beneficiary occupies and uses in a manner described by this subchapter and in which the settlor or beneficiary owns a beneficial interest through a qualifying trust is considered the homestead of the settlor or beneficiary under Section 50, Article XVI, Texas Constitution, and Section 41.001.

As long as the requirements for a qualifying trust under 41.0021 are met, the homestead exemption does not disappear when the homestead property is transferred into trust. A married person cannot transfer homestead property into trust, however, without spousal joinder on the instrument of conveyance pursuant to Tex. Fam. Code 5.001. Once in trust, the trustee may convey the homestead property “without the joinder of either spouse” unless the terms of the trust expressly prohibit doing so (Tex. Prop. Code 41.0021(c),(d)).


As with Texas, the homestead exemption for Florida has no value cap (making the federal homestead exemption inferior). From the Florida Constitution, a homestead must be “owned by a natural person” and is not to exceed 160 acres if located outside a municipality, or .5 acre if located within a municipality (Art X, section 4(a), Fla. Const.). The Florida homestead exemption is “limited to the residence of the owner or the owner’s family.” The Florida Constitution also designates an exemption for personal property up to $1,000 (Art X, section 4(a)(2), Fla. Const.). Married persons cannot abandon or transfer homestead property without spousal joinder (Art X, section 4(c), Fla. Const.).

The “natural person” designation is where the complication arises in determining whether Florida’s homestead exemption remains intact when the homestead is transferred into a living trust. Homestead protections will not follow property titled in the name of an LLC, corporation, or irrevocable trust, though Fla. Rev. Stat. 689.071(8)(h) indicates a land trust can own homestead property [5]. Certain rulings indicate that living trusts may hold title to homestead property also [6].

Per the Florida Bar, “special language may be required in the trust agreement and the deed” into trust to maintain homestead tax exemption, but “homestead property may lose its exemption from creditors when title is held in a revocable trust—the bankruptcy law on this point is unsettled” [7].


California offers both an automatic homestead and a declared homestead under the Cal. Code of Civil Procedure (704.720, 704.920). The benefits of an automatic homestead are available to all California residents who meet homestead property qualifications, and offer the same value of asset protection as a declared homestead. A declared homestead, however, allows Californians additional benefits, such as protection of sale proceeds from creditors. This choice is opt-in only, and a declaration of homestead must be recorded (before a creditor records an abstract of judgment) [8].

The homestead exemption amount in California is either $75,000 (for an individual), $100,000 (for a head of household with dependents), or $175,000 (for an individual if they or a spouse are of a certain age; have a disability; or meet low-income qualifications). The homestead exemption does not double for spouses [9].

The “natural person” designation has also come up in California, most notably in Fisch, Spiegler, Ginsburg & Ladner v. Appel (1992). The court determined that a homestead exemption applies when the personal residence is held in a living trust [9].

Take the time to understand how individual and spousal rights may change when transferring real property into a living trust. Homestead law concerns the family home, often the most significant asset in an estate. Each situation is unique, and good advice early saves money and aggravation later, so consult with an experienced estate planning attorney when deciding how to manage homestead property.