One of the best asset protection tools available to a homeowner is the Homestead Declaration. Quite simply, if you reside in a home you own in Massachusetts, you can file a Homestead Declaration in the office of the county clerk in the county in which your home is located. That can protect up to $500,000 in equity from creditors. Disabled co-owners aged 62 or older may each file a Homestead Declaration, which can be helpful if the total home equity exceeds $500,000.
The Homestead Declaration protects home equity from lawsuits and bankruptcy. (Unfortunately, but understandably, lenders usually require that a Homestead Declaration be removed as a precondition to obtaining a mortgage, or refinancing.) It bears noting that the Homestead Declaration does not apply after the homeowner’s death so it does not protect the estate from creditors. Nor will it protect the proceeds of the sale of a home from creditors.
Nonetheless, it is easy and inexpensive to execute and file a Homestead Declaration, and every Massachusetts homeowner should do so.
