Protect Your Home’s Equity With The Massachusetts Homestead Statute
For many families, their home is one of their biggest financial assets. The Massachusetts Homestead Statute is a law designed to protect it. By shielding the equity in one’s primary residence from being seized for debt payment, this law can provide you with strong homestead protection from creditors.
At Curley Law Firm LLP, our Certified Elder Law Attorneys (CELAs) help clients use the homestead statute to protect the equity in their primary residence. We treat this as a foundational step, ensuring it integrates properly with your overall financial plan. Our goal is to ensure you understand how this protection works and how to maximize its benefit for your family.
What The Homestead Statute Protects And Its Limits
The homestead statute provides significant lien and levy protections against debts from medical bills, accidents or business losses. It protects the value or equity you have in your home up to a certain limit. However, it is not absolute. There are important foreclosure exceptions, meaning the homestead cannot stop a foreclosure if you fail to pay:
- Your mortgage
- Your property taxes
- Liens from contractors (mechanic’s liens)
- Your condominium or homeowners association (HOA) fees
Understanding these limits is just as important as understanding the benefits.
Automatic Versus Declared Homestead: Maximizing Your Protection
Every homeowner in Massachusetts automatically receives a homestead exemption of $125,000. You do not have to do anything to get this basic protection. However, you can increase that protection to $1,000,000 by filing a formal “Declaration of Homestead.” The equity limits under the homestead law are significant, and filing a declaration is a critical step for anyone with substantial equity.
While the homestead declaration requirements are straightforward, precision is key to ensuring the protection is valid. Our attorneys can handle the entire process for you. We will help you:
- Prepare the necessary legal documents
- Ensure the property description is accurate
- File it correctly with the appropriate Registry of Deeds
This removes any guesswork or risk of error on your part so that you receive the maximum protection available under the law.
Ensuring Your Homestead Declaration Works With Your Estate Plan
A Declaration of Homestead must be coordinated with your estate plan. For example, if you transfer your home into a trust, the trustee must file a new Declaration of Homestead to secure the $1,000,000 protection for the resident beneficiaries. Failure to take this specific step can result in losing the protection entirely.
For married couples, owning your home as “tenants by the entirety” can provide a form of creditor protection. However, this protection is not the same as a homestead declaration. While tenancy by the entirety protects your home from creditors who only have a claim against one spouse individually, a homestead exemption protects your home’s equity from creditors who have a claim against both of you jointly.
Our attorneys will analyze both your trust and your deed to ensure these protections work together seamlessly. We will also work to make sure that, in the case of one spouse’s death, the surviving spouse’s homestead rights are secure.
Answering Questions About The Homestead Statute
To use the homestead exemption effectively, it’s crucial to understand not just what it does, but also what it doesn’t do. Here are answers to some common questions:
Does the homestead protect your home in bankruptcy?
Yes. This is one of its most powerful applications. The bankruptcy homestead exemption allows you to protect up to $1,000,000 of your home’s equity, preventing it from being sold to pay off debts in a bankruptcy filing.
Will it protect your home from MassHealth (Medicaid)?
Not usually. The homestead protects your home from most creditors during your lifetime. However, it does not stop MassHealth from placing a lien on your home if you are on certain MassHealth benefits, and does not prevent MassHealth Estate Recovery from making a claim against your home after you pass away to recover long-term care costs. Protecting your home from MassHealth requires a different set of elder law strategies, which is a core part of our planning process.
Can you protect a vacation home or rental property?
No. The protection applies only to your declared primary residence in Massachusetts. You cannot file a Declaration of Homestead on a second home, vacation cottage or investment property, either in Massachusetts or another state.
Let Us Help You Protect Your Home: Contact Us Today
Properly using the homestead statute requires more than just filing a form. It demands careful coordination with your trust, estate plan and long-term care goals. Our board-certified attorneys can provide the clear answers you need. Schedule an appointment at Curley Law Firm LLP today by calling 866-406-8582 or by filling out our online form.