Massachusetts Homestead Declaration to Protect Your Home’s Equity

A Homestead allows homeowners to protect their family home from certain creditors up to a particular amount. An Automatic Homestead exists on all principal residences, protecting the home to the extent of $125,000. This number can increase to $500,000 if you have a Declaration of Homestead. A Declaration of Homestead is a written legal document that becomes effective once it is signed by all owners of the property and recorded at the Registry of Deeds. For full protection, all owners must occupy the residence.

Besides increased protection, a Declared Homestead offers many other benefits. For example, the protection extends to a spouse, children, and any other family members living in the home. If an unmarried individual later marries, the protections are automatically applied to the spouse. Upon divorce, the spouse residing in the home retains the Homestead. In the event of a death, a surviving spouse automatically inherits the Homestead, preserving the protection for her, her children, and any other family members living in the home. Under a new Massachusetts law, spouses can each declare a Homestead, which doubles the protection to an aggregate value of $1,000,000. If there are more than two joint tenant owners, it may be possible to secure an additional $250,000 under certain circumstances. Multiple tenants in common or beneficiaries of a trust, however, are protected proportionate to the percentage of the property they own.

In addition, the home is shielded to some extent in the event of a sale or damage. If the home is sold, the proceeds are protected for one year or until a new home is purchased. Funds collected from insurance in the event of a fire or other damage are protected for two years or until a new home is purchased or the damaged home is reconstructed.

There are certain types of creditors against whom no protection is granted, even with a Declaration of Homestead. The exemptions include mortgages, taxes, spousal and child support, and debts recorded prior to the Homestead. Any liens recorded after the Declaration, however, are subject to protection, which highlights the importance of declaring a Homestead as soon as possible.

Homesteads can be terminated in a number of ways, such as a conveyance of the home to a non-family member, a subsequent declaration on another home, abandonment of the home, a recorded release of the Homestead (signed by each owner), or sometimes death. Nevertheless, other transactions can be made without terminating the Homestead, including transfers between spouses, former spouses, co-owners, trustee and beneficiary (if the property is held in a trust), and life tenant and remainderman, or a party who has a future ownership interest and will inherit the property upon the death of the life tenant.

Elderly Homesteads apply to individuals 62 years of age and older, protecting the home up to a value of $500,000. If the elderly individual also has a Declared Homestead, the home is protected up to $1,000,000. If there are two elderly individuals living in the same home, then the value protected is aggregated to $1,000,000, whether they declare the Homestead individually or jointly. Elderly Homesteads terminate at death. For this reason, if there are other individuals living in the home who are under the age of 62, it is important to consult an attorney in order to adequately protect the home. This type of homestead also applies to disabled individuals.

Although your home may be automatically protected, it may not be wise to rely on a secured value of $125,000. The benefits of a Declared Homestead are far-reaching. Contact an attorney at the Baker Law Group of Massachusetts to discuss your individual circumstances and ways to protect your home.