A: Your decision should not be taken lightly. It may affect not only your heirs, but also your assets during your lifetime.

The Florida Constitution provides powerful protection for homestead property against creditor claims. Article X, Section 4 provides that homestead property owned by a natural person is exempt from forced sale and judgment, except for payment of taxes, governmental assessments and liens voluntarily created by the owner.

In 2001, the U.S. Bankruptcy Court for the Middle District of Florida held that the constitutional protection applies only to a person in his or her individual capacity, not as trustee of a trust the person establishes for his or her benefit.

That means placing homestead property in your living trust will expose it to creditor claims both during your life and after you die.

As I often tell clients, you may not have a creditor today, but if you die in an automobile accident caused by your negligence, your estate may have one or more very large creditors.

Because of this concern, I do not recommend placing homestead property in a living trust.

I assume that the primary reason for placing your property in a living trust is to avoid probate.

If you devise your homestead in your will, your goal of avoiding probate will not be met. However, the property will remain free from creditor claims as long as the property is devised to your spouse and/or heirs. Heirs are generally blood relatives.

So if you leave your homestead to a friend instead of a relative, the protection from creditor claims again will be lost. If you leave it to those people protected by Florida law, the exemption continues and those people can sell your home after they receive it free of creditor claims.

Florida's homestead laws are meant to protect a family from creditor claims so the family has a place to live. Along with this protection are statutory restrictions on your ability to devise or transfer homestead at death if you are survived by a spouse or minor children. The same restrictions apply to directions in your living trust.

For example, if you are survived by a spouse and lineal descendants, the surviving spouse takes a life estate in the homestead, with a vested remainder to the lineal descendants. These restrictions can complicate the overall estate plan and must be included as part of your consideration.

If your goal is to avoid probate and still retain protection from creditor claims, you might consider using the "Lady Bird" deed.

In a Lady Bird deed, the owner conveys title to himself, with the remainder after his death to go to named individuals (most often children), but he retains the right during his lifetime to change, sell or otherwise deal with the property, including the power to sell and keep the proceeds.

The Lady Bird deed is not often used, but can be very effective. It prevents problems of deeding to children as joint owners, such as gift tax returns and creditors of the children. It also retains the protection against creditor claims from Medicaid, which is lost when a deed merely reserves a life estate in grantor with remainder at death to the children.

Your decision concerning homestead property should not be made in isolation. It requires careful review of all aspects of your estate planning, assets and beneficiaries. Rather than listening to friends' advice, I strongly urge you to consult with an experienced estate-planning attorney.

William G. Morris is an attorney with offices at 247 N. Collier Blvd. on Marco Island. The information in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney. Questions for this column can be sent by e-mail to wgmorrislaw@earthlink.net , or by fax to (239) 642-0722. Read other columns at http://www.wgmorris.com.

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