Positive Changes to the Homestead Protection Law

Relaxing Retirement member Cliff Straw recently brought this announcement to my attention, and I wanted to share this update with all of you who are Massachusetts residents.

In the past, you’ve heard me recommend filing for Homestead protection on your primary residence.  For some of you, that coverage just got a lot better and simpler.

There are three major changes in the law that I want to make you aware of:

  1. The new law creates an automatic $125,000 protection on homes that do not have a homestead declaration filed at the Registry of Deeds in order to safeguard deposits and situations where a declaration may be incorrectly filed. Homestead protections now extend to pre-existing debts and the proceeds of a sale or insurance coverage.
  2. Trusts are now eligible for homestead protections, so if your house is titled in trust, you can now apply.
  3. For those individuals over the age of 62 or legally disabled, the new law now expressly states that a homestead may be filed on each individual’s behalf and the aggregate protection increases to $1 million.

To begin with, if you filed a homestead declaration prior to March 16, 2011, your protection will continue to apply. There is no need to re-file your homestead protections due to these statutory changes.

If you haven’t filed one yet, there’s no reason not to, especially if you’ve held back because your home is titled in trust.

The Commonwealth of Massachusetts put out a Question and Answer brochure on the most commonly asked questions.  Here are some of the major questions and answers:

What is a Declaration of Homestead/Homestead Protection?

An estate of homestead is a type of protection for a person’s principal residence. There is an automatic homestead protection of one hundred and twenty-five thousand dollars ($125,000) with respect to a home that does not declare a homestead exemption with the Registry of Deeds.

This automatic protection may be sufficient to protect a deposit made upon the estate; however, it is not likely to be sufficient coverage to protect the full value of your home. In order for homeowners in Massachusetts to protect the value of their property up to five hundred thousand dollars ($500,000) per residence, per family, you must file a document called a “Declaration of Homestead”.

The form is filed at the Registry of Deeds in the county or district where the property is located, referencing the title/deed to the property.

How am I protected?

The real property or manufactured home which serves as an individual’s principal residence upon filing a declaration of homestead shall be protected. A principal residence is considered to be the primary dwelling where an owner, and their family if applicable, reside or intend to reside.

The declared estate of homestead shall protect against attachment, seizure, execution on judgment, levy or sale for the payment of debts to the extent of five hundred thousand dollars ($500,000) per residence, per family. ($1 million for couples age 62 and over).

Will my Homestead declaration protect my home from being taken if I go into a nursing home?

Liens imposed by the Massachusetts Department of Transitional Assistance (formerly Public Welfare), as a result of the payment of Medicaid benefits, are exempt from the homestead protection.

However, as of the printing of the brochure, as long as the recipient, or the spouse of the recipient, is alive, the Commonwealth will not look to the residence for reimbursement of Medicaid benefits. If the surviving spouse is also the recipient of Medicaid benefits, the Commonwealth will file a claim for reimbursement from the estate for the entire amount of Medicaid benefits paid, once the surviving recipient has died.

Essentially, you and/or your spouse may remain in your home, but your estate will eventually have to reimburse Medicaid through the sale of your home for balances paid on your behalf.