On this date 11 years ago (March 16, 2011) a new homestead law went into effect in Massachusetts. To commemorate that anniversary, we present a few highlights of the 2011 Homestead law.
What is the Massachusetts homestead law? The Massachusetts homestead law protects a homeowner’s primary residence from forced sale by an unsecured creditor. That means that if you are sued and your creditor obtains a judgment against you, you cannot be forced to sell your home to satisfy the judgment up to the amount of the homestead protection. The homestead protection extends to the homeowner’s family which is defined as spouse and minor (under age 21) children.
How much is the homestead protection? Under the 2011 Massachusetts law, a homeowner is entitled to automatic homestead protection of $125,000. However, homeowners who file a Declaration of Homestead with the Registry of Deeds can increase that protection to $500,000. For married couples where both spouses are over the age of 62, the homestead protection can be doubled to $1 million by filing an ‘elderly’ homestead. Increased homestead protection is also available to disabled individuals.
If a home is owned in trust is the homestead still available? Yes. The 2011 version of the homestead law specifically includes homes owned in trust as eligible for homestead protection. This was an important change made by the 2011 homestead law as the prior law did not include any reference to homes titled in trust which created a lot of uncertainty.
Will a Declaration of Homestead protect the home from a lien for nursing home care costs? No. A Declaration of Homestead will not protect a home from a lien by the Commonwealth of Massachusetts for Medicaid benefits paid on behalf of the homeowner, and this includes benefits paid for nursing home care. There may be other ways to protect the home from such a lien, but the homestead does not protect against governmental liens such as for taxes or Medicaid benefits.
Will a Declaration of Homestead prevent my mortgage holder from foreclosing on my mortgage? No. The protection of the homestead extends only to unvoluntary, non-governmental liens such as judgment creditors.
Is the Homestead protection lost if I sell my home? No. Under the 2011 version of the homestead law, the proceeds from the sale of a home are protected for up to one year following the sale. This is an important protection for homeowners who may be involved in a lawsuit and who want to sell their home and move while the lawsuit is ongoing or those whose home is subject to a judgment. Under the prior law, the homestead protection ended when the home was sold. This means that a creditor could show up at the closing on the sale of the property and collect the debt if there was a judgment. Under our current homestead law, if the proceeds from the sale of the home are invested into a new home within the one-year period following the sale, then the proceeds are beyond the reach of a creditor. The new homestead law protects insurance proceeds received as a result of a fire or other casualty from the reach of creditors for a period of two years.
Do I need to re-file a Declaration of Homestead if I refinance my mortgage? No. The 2011 statute states explicitly that the homestead protection is not waived as to creditors when the homeowner signs a mortgage that includes a waiver of homestead provision. The waiver of homestead provision in the mortgage relates only to the mortgage (which the homestead does not protect against anyway since it is a voluntary lien). This was also an important change made by the 2011 homestead law. Previously, a mortgage filed subsequent to the filing of a Declaration of Homestead terminated the Homestead protection.
While filing a Declaration of Homestead does not make a debt go away, it does protect a homeowner from being forced to sell the home to pay that debt. I often tell my clients that the homestead is like ‘cheap insurance’ – it only cost $35 to file ($36 in Norfolk County) and it can usually be done by the homeowner without the need for an attorney. (If your property is held in a trust, consult with your attorney about filing a homestead to make sure is it done properly). If you have questions about homestead protection or if we can help you with your estate planning needs, please don’t hesitate to contact us.
Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.
© 2022 Samuel, Sayward & Baler LLC