In Massachusetts, a “homestead” refers to a legal protection that allows homeowners to shield a portion of the equity in their primary residence from creditors. This protection is known as the “Declaration of Homestead.” It helps protect homeowners from the forced sale of their property to satisfy certain debts.
Recently, Governor Maura Healey approved Session Law 2024, c. 150, s. 51 (an Act relative to the Affordable Homes Act), which increased the protections that homeowners can receive by filing a Declaration of Homestead with the county Registry of Deeds from $500,000 to $1,000,000 in equity.
Here’s how the updated homestead law works in Massachusetts:
1. Automatic Homestead Protection
Homeowners automatically receive $125,000 in protection for their primary residence without needing to file any paperwork.
2. Declared Homestead Protection
Homeowners can increase this protection up to $1,000,000 by filing a Declaration of Homestead with the county Registry of Deeds. This requires a one-time filing. For joint tenants or tenants by the entirety, this amount is unallocated among the owners, whereas for tenants in common and trust beneficiaries, the amount is divided among all of the co-tenants or trust beneficiaries who reside in the home as their principal residence.
3. Protection for Seniors and Disabled
If a homeowner is 62 years or older, or legally disabled, they can file a declaration to protect $1,000,000 for each owner on the property. So, a couple who both meet these criteria could have up to $2,000,000 in protection!
The homestead exemption protects against unsecured creditors, meaning debts like medical bills, credit card debt, or lawsuits. It does not protect against mortgages, tax liens, child support, or spousal support obligations. Any liens on the home prior to filing a Declaration of Homestead are valid and not extinguished by later filing a Declaration.
This change in the law reflects the increased value of homes in the Commonwealth and the corresponding equity vulnerable to creditors. This change is automatic, and any existing Declarations of Homestead do not need to be refiled in order to receive the increased protection.
The Massachusetts Homestead Act provides significant security for homeowners by ensuring that, even in the event of financial hardship, they may be able to retain their home.
If you would like to review your estate plan and discuss how this new law may affect you, contact our office at info@MulhallWithrow.com or give us a call at (781) 381-5287 to schedule a consultation. Out attorneys at Mulhall Withrow are ready to help.