A client is planning to sell her Florida homestead and move to Texas where she would buy a new homestead property. She wants to know if sales proceeds from the Florida homestead is exempt in a segregated bank account while she is looking for a house in Texas. Texas also has unlimited homestead exemption.
The proceeds from the Florida homestead sale is protected in a segregated bank account for a reasonable time while the debtor/owner searches for a new homestead. However, as far as I know, all the cases dealing with exempt homestead accounts involved the debtor’s replacement of one Florida homestead with another Florida homestead. I’m not sure the debtor’s intent to buy a house in another state qualifies as the continuation of Florida’s homestead exemption. Most states have a cap on the homestead exemption. Until the debtor actually chooses his new homestead state a court could not determine who much money in the homestead account warrants exemption. What if this client changes her mind and moves to a state other than Texas?
In my opinion, a court will only exempt money in a homestead account that is intended to be reinvested in a new Florida home. The intent to leave Florida expresses an abandonment of Florida’s homestead exemption including sales proceeds.
