Homestead Protection

If you live in MASSACHUSETTS courtesy of www.lowelldeeds.com
Massachusetts law allows a homeowner to protect the equity of the family home by recording a Declaration of Homestead at the Registry of Deeds. The recording fee is $35 and the Homestead becomes effective immediately upon recording.

How does the Homestead work?By filing a Declaration of Homestead, you exclude up to $500,000 in the value of your personal residence from creditors. You still may incur debts and, if you have other assets like bank accounts or a vacation home, they can be seized to satisfy your debts, but your home would be protected for as long as you continued to live in it.

When should I record a Homestead?As soon as possible. The Homestead only protects you from debts that come into existence after the Homestead has been recorded. When you need the Homestead, it's too late to record it. (Although most attorneys advise clients to record a Homestead even after a debt has come into existence since it might provide some protection).

What's the downside of a Homestead?There isn't one. Having a Homestead does not prevent you from selling or refinancing your home. It does not harm your credit report. It just protects your home.

Does a Homestead replace insurance?Absolutely not. You should still carry adequate insurance on your home, car and possessions. The Homestead is in addition to insurance.

My spouse and I both own our home; do we both sign the Homestead form?No, the Homestead law specifies that only one spouse may file a Homestead, but that Homestead protects the family home against creditors of either spouse. If you or your spouse are 62 or older, however, you may both file a Homestead form.

My brother and I jointly own our home; do we both file Homesteads?
If two or more people jointly own a home, every joint owner who lives in the house should file a separate Homestead.

May I file a Homestead on my vacation home?
The Homestead only applies to your primary residence.

Will a Homestead protect me from nursing home costs?
Not really. Technically, if you go into a nursing home as a private pay resident and accumulate substantial charges that you cannot pay, the nursing home would be your creditor and could sue you for the amount owed. In this case, the Homestead would work. But the great majority of people in nursing homes have their bills paid by Medicaid (i.e., the Commonwealth of Massachusetts). The value of Medicaid benefits you receive are not covered by the Homestead.

I signed a deed transferring an interest in my home to my daughter; do I need a new Homestead?
Yes. If you already have a Homestead and then sign a deed transferring an interest in your home to someone else - even if you keep an ownership interest in the home and still live there - you must record a new Homestead to be protected. Signing a new deed automatically dissolves an existing Homestead.

If you live in NEW HAMPSHIRE
CONGRATULATIONS! Nothing further than your Deed needs to be recorded for homestead protection in New Hampshire. It is automatically vested by Statute. However, it is important to make sure the person selling you the home releases their homestead rights within the Deed. The protection in New Hampshire is $100,000.00 per person.

posted by Attorney Pete Smith @ 5:23 AM