How does the Homestead work?

By filing a Declaration of Homestead, you exclude up to $500,000 in the value of your personal residence from creditors.  You still may incur debts and, if you have other assets like bank accounts or a vacation home, they can be seized to satisfy your debts, but your home would be protected for as long as you continued to live in it.  

When should I record a Homestead?

As soon as possible.  The Homestead only protects you from debts that come into existence after the Homestead has been recorded.  When you need the Homestead, it's too late to record it.  (Although most attorneys advise clients to record a Homestead even after a debt has come into existence since it might provide some protection).

What's the downside of a Homestead?

There isn't one.  Having a Homestead does not prevent you from selling or refinancing your home.  It does not harm your credit report.  It just protects your home.

Does a Homestead replace insurance?

Absolutely not.  You should still carry adequate insurance on your home, car and possessions.  The Homestead is in addition to insurance.

My spouse and I both own our home; do we both sign the Homestead form?

No, the Homestead law specifies that only one spouse may file a Homestead, but that Homestead protects the family home against creditors of either spouse.  If you or your spouse are 62 or older, however, you may both file a Homestead form.

My brother and I jointly own our home; do we both file Homesteads?

If two or more people jointly own a home, every joint owner who lives in the house should file a separate Homestead.

May I file a Homestead on my vacation home?

The Homestead only applies to your primary residence.

Will a Homestead protect me from nursing home costs?

Not really.  Technically, if you go into a nursing home as a private pay resident and accumulate substantial charges that you cannot pay, the nursing home would be your creditor and could sue you for the amount owed.  In this case, the Homestead would work.  But the great majority of people in nursing homes have their bills paid by Medicaid (i.e., the Commonwealth of Massachusetts).  The value of Medicaid benefits you receive are not covered by the Homestead. 

I signed a deed transferring an interest in my home to my daughter; do I need a new Homestead?

Yes.  If you already have a Homestead and then sign a deed transferring an interest in your home to someone else - even if you keep an ownership interest in the home and still live there - you must record a new Homestead to be protected.  Signing a new deed automatically dissolves an existing Homestead.

I just refinanced; do I need a new Homestead?

This question comes up all the time and there is no clear answer.  Technically, a mortgage is a deed, so according to the prior answer, a newly recorded mortgage would dissolve the existing Homestead.  Most lawyers and judges we have spoken with, however, feel that a mortgage is not a deed despite the technicalities of the law.  Under this reasoning, you would not need to record a new homestead after recording a new mortgage.  We must emphasize, however, that this is remains an unanswered question.  Also, the debt created by the new mortgage is not covered by the Homestead.

Is it a good idea to file a new homestead, just to be safe?

Many people (including quite a few lawyers) feel this way.  The only problem with this approach is that the Homestead protects against debts that arise after the Homestead is recorded.  If you recorded a Homestead in 2000 and incurred a debt in 2002, the Homestead works.  But if you record a new Homestead in 2005, that 2002 debt predates your Homestead which no longer protects your home from that debt.  A new Homestead dissolves an older one, and there is no continuation of coverage.

I have more questions.

You can use the above link to chapter 188 to read the Homestead law, but don't hesitate to send your questions to us by email.