Attorneys, Elder Law

Protect your home with a homestead declaration By Neal A. Winston, Esq. While the term "homestead" may conjure up images of a settler's cabin in the Wild West, a homestead is actually a useful way of protecting your most valuable asset - your home - from creditors. A homestead declaration protects the equity in your home from claims of creditors up to $500,000 (recently increased from $300,000). By filing the appropriate papers to "declare" your home as your homestead, you may be able to retain ownership in the event of a future financial catastrophe. There are two types of homesteads under Massachusetts law. One establishes general protection for all individuals, while the second type establishes additional protection for elderly and disabled individuals. The purpose of the homestead is to protect the home of a debtor, debtor's spouse or debtor's minor children, from creditors and their claims. To secure this protection, the homeowner must file a Declaration of Homestead with the Registry of Deeds where the deed to the property is recorded. (One exception: If the property cited in the homestead is a manufactured home (mobile home), then the homestead needs to be filed with the town clerk's office of the town in which the home is located.) You may file a homestead as long as your home is your primary residence and you own an interest in the home. A homestead may only be filed on a primary residence where you actually live - no vacation homes or rental properties. However, there is no set limit regarding the size or value of the property. Homestead forms may be obtained at most Registries of Deeds. Special treatment for seniors The homestead law offers additional protection for those over the age of sixty-two or disabled individuals. If both spouses/owners are over sixty-two or disabled, they may be entitled to protect up to $1,000,000 in equity in their homes if both owners file separate declarations of homestead. The marital status of the couple is not relevant to this law. Therefore, a couple, upon reaching the age of sixty-two or who are disabled, should each file a homestead, regardless of whether they previously had a prior homestead on the property. Disabled person qualification In order to qualify as a disabled individual for the purposes of the homestead law you must be determined to have permanent physical or mental impairment, meeting the disability requirement of Supplemental Social Security. An individual is considered disabled for the purpose of the homestead law if they cannot engage in gainful employment as a result of their disability. You must attach to the Homestead form either the original or a certified copy of the award letter issued by the United States Social Security Administration, or a letter signed by a licensed physician registered with the Massachusetts Board of Registration in Medicine. What is not protected by homestead Declaring a homestead for your home is not a remedy for all situations. For example, if you file for bankruptcy it is important to note that a homestead protects against preexisting debts, but only if those debts have not been recorded prior to the filing of the homestead. Furthermore, the homestead declaration does not protect the home from the following: A Medicaid lien, or any imposed by State or Federal Government; Debts secured using the home as equity; Federal, state and local taxes, assessments, claims and liens; First and second mortgages; Debts, encumbrances or contracts existing prior to the filing of the declaration of homestead; Judgment of spousal support or child support; Where buildings on land are not owned by the homestead declarant and are attached or sold for the ground rent of the lot where they stand. In conclusion, the issues and laws surrounding homesteads can be very confusing. It is in the best interest of individuals who want to ensure that their interests are properly protected to seek the advice of an attorney. A homestead is one of the greatest financial protections available and it is well worth seeking out professional advice to ensure that it is done correctly. Neal A. Winston, Esq. is a partner in the law firm of Moschella & Winston, LLP, which specializes in elder law. It is located at 440 Broadway, Somerville, Mass., 02145. For more information call 617-776-3300 or visit online at www.moschellawinston.com.