A homestead is more than just a home. Homes are places where families have made memories over the years, a source of pride for the owners, and one of the largest financial investments a person will have. Understanding how a homestead will transfer upon your death is something that needs to be considered in advance.
Minnesota law has some special provisions for the disposition of a homestead after the death of an individual. A homestead is residential real estate that is occupied and used for the purposes of a homestead by its owner, who must be a Minnesota resident.
In addition to determining how the homestead is transferred, Minnesota law dictates how funds generated from the sale of a homestead may be used.
Homestead Descent in Minnesota
The passing of an individual’s homestead at death is governed by Minnesota law if the home is part of the probate estate. The laws of homestead descent apply regardless of whether an individual has a will or not.
Under Minnesota law, the homestead of an individual will pass first to the surviving spouse for his or her life, with the remainder interest then going to surviving children of the decedent. Put simply, a surviving spouse has the right to remain in the home for the rest of their life. The children of the deceased individual would receive the home after the surviving spouse passes away.
For example, suppose Stuart and Beatrice have been married for 30 years and own a home that they’ve lived in for the last 20 years. Stuart and Beatrice have 2 children together. When Stuart passes away, Beatrice will receive the right to live in the home for the rest of her life. After Beatrice passes away, the home will then transfer equally to the 2 children.
To illustrate how conflict can arise, consider the following scenario where a homestead is subject to probate: A was married to B for 30 years prior to B passing away. A and B had 4 kids together during their marriage. After B passed away, A married C. A and C have been married 3 years and live in the home A shared with B. A dies unexpectedly. C has the right to remain in that home for life, even over the objections of A’s 4 adult children who wish to sell the homestead.
Of course, if the owners of the property own the home as joint tenants, the property will pass directly over to the other joint owner when one of the dies.
Restrictions on Using Proceeds from Sale of Homestead at Death
Minnesota law also restricts what the proceeds from a sale of a homestead can be used for after death when the homestead is sold as part of a probate administration.
The homestead passes to the surviving spouse or descendants free of claims, except of claims that were valid charges on the property at the date of death, claims for state hospital care, and claims for medical assistance benefits. If the homestead passes to someone other than a spouse or descendants, it is subject to the payment of expenses of administration, funeral expenses, expenses of last illness, taxes, and debts.
Everyone’s situation is different. It is tremendously important for you to have a proper plan in place that takes into consideration the distribution of your estate under Minnesota law if you have no other plans in place. Executors of estates should also proceed with caution anytime they are handling the estate of a deceased loved one with a homestead.
Our attorneys work with individuals and families every day on their estate plans and assist with estate administration throughout Southeastern Minnesota.
Interested in estate planning or probate updates? Subscribe to our quarterly newsletter to stay informed.