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The Heritage Law Center, LLC Blog

Seniors: Circle Your Wagons to Protect the Homestead

Dorothy hit it right on the head when she said, “There’s no place like home.” In fact, for many people their home is the single largest asset in their estate.

POSTED ON: January 1, 2011

Dorothy hit it right on the head when she said, “There’s no place like home.” In fact, for many people their home is the single largest asset in their estate. For seniors, a simple estate planning tool can help protect this invaluable asset from potentially tens of thousands in creditor liens.

A Homestead Exemption is a legal document that, when properly filed with the Registry of Deeds, protects up to $500,000 of your home’s equity from both attachment and execution by creditors. This exemption reflects a public policy that recognizes the importance of maintaining a home for the family regardless of the financial circumstances of the homeowner. However, the homestead exemption does not apply to certain debts, including tax debt, mortgage debt, child support , Medicaid liens and debts contracted prior to the house purchase.

Many people obtained this $500,000, or “regular,” homestead exemption when they purchased their home, having filed the proper paperwork along with the myriad other forms signed during the closing process. However, there is a further exemption available for seniors that many people fail to take advantage of. In 1987, an “elderly and disabled persons” homestead exemption was introduced into Massachusetts law. This homestead exemption, which is available to persons over 65 years old and disabled individuals, also offers up to $500,000 of equity protection. The difference between these exemptions is that the “regular” exemption is only available once per household whereas the “elderly” exemption allows both spouses to file for protection, in effect providing a home-owning elderly couple with $1,000,000 worth of equity protection.

Seniors considering taking advantage of this added protection should keep in mind that in order for both spouses to claim a homestead exemption they must both have an ownership interest in the property. This may require a conversation regarding how your property is held, i.e. jointly or individually. Also, where both spouses plan to file for an exemption, they both must be 65 or older and should file together, as filing a homestead exemption automatically discharges any previously filed exemptions.

For more information on how the elderly homestead exemption can be used to supplement your estate plan and protect your home, contact a Massachusetts estate planning attorney.