Estate Planning – Homestead Declaration No Covered Wagon Required

Homestead WHAT? It’s 2016, who has a “homestead?” Well if you own a house, condominium, manufactured home, etc. then you have a homestead!

In Massachusetts, a homeowner receives automatic protection on their principal residence in the amount of $125,000. That amount is protected against the reach of an unsecured creditor.

The most common example of an unsecured creditor is a credit card issuer. Money is borrowed from that company without any claim on a corresponding asset, unlike the lender for your car loan. That lender is a secured creditor because that company can claim the car in the event you don’t pay.

By filing a Homestead Declaration you increase that protection to $500,000 per residence, per family.

  • Who Can File A Homestead? – Anyone owning a home as an individual, joint owner or trustee of a trust?
  • What About My Spouse Or Family If I Pass Away? – The law protects your surviving spouse’s and family’s rights in the home and shall continue even if your surviving spouse remarries.
  • Does the Homestead Protection Take The Place of Home Owner’s Insurance? – NO!
  • Does A Homestead Declaration Protect Me From Mortgage Or Home Equity Creditors? – No, a Homestead Declaration provides protection against unsecured creditors only. It does not offer protection from mortgage lenders or home equity lenders as they are secured creditors.
  • What If I Get Married/Divorced? – If you declared your homestead as a single person and later marry, the protection extends automatically to your new spouse. Conversely, if you divorce, the homestead is protected against loss through the divorce proceedings and if either party remains in the home, his/her homestead protection will not be impacted.
  • I Have A Second Home, Can I File a Homestead Declaration For That Home Also? – No, this protection applies to your principal residence only. According to the statute, only one residence may serve as the principal residence.

It is well worth the time and effort to file a Homestead Declaration. In the Boston area, $125,000 might cover our deposits but certainly not a meaningful value on our homes. Please reach out to Attorney Reilly and she will be happy to discuss your circumstances and related requirements.

The Office of the Attorney General provides a wonderful brochure on this topic:

http://www.sec.state.ma.us/rod/rodhom/Homestead_q_and_a.pdf

The previous discussion is a general overview of Homestead Declaration eligibility, protection and requirements. It is not intended as legal advice or an exhaustive discussion of the Massachusetts Homestead Act and its requirements.