by Richard P. Morse, Jr., Esquire

as published in the Cape and Islands Board of Realtors Monthly News Letter

By recording a Declaration of Homestead on one's primary residence, Massachusetts' homeowners are utilizing an inexpensive estate planning tool with built-in protection of their assets from creditors. There are two types of homesteads which may be declared.

Presently Massachusetts General Laws Chapter 188, Section 1, provides that an "owner" (sole owner, joint owner, tenant by the entirety, or tenant in common) may declare an estate of homestead on his or her primary residence up to the value of $500,000, and it shall continue for his or her life. If the "owner" has a spouse, it continues for the life of the spouse. In addition, if the "owner" has children, it continues during the minority of the children. There may only be one estate of homestead per residence under this section and a "family" (parent and child, husband and wife and child, or sole owner) may only benefit from an estate of homestead on one principal residence.

The estate of homestead so created cannot be alienated without the consent of the spouse, and is exempt from levy on execution and sale except for a sale for taxes, pre-existing debts, mortgages, judgments for alimony or child support, or a judgment based on fraud, mistake, duress, undue influence, or lack of capacity.

Section 1A of the same chapter allows persons 62 years or older and disabled persons to file a declaration of homestead which protects their primary residence or mobile home to the extent of $1,500,000 per person. This claim of homestead and it's protection against attachment, seizure or execution terminates on the death of the claimant and is destroyed by a conveyance of the property. As with the estate of a homestead created under section one, this claim is subject to preexisting debts, judgments for spousal support, and mortgages. It is also subject to federal, state and local taxes, assessments, claims and liens such as a Medicaid lien.

The idea of a Homestead Declaration dates back to the English Common Law and was originally meant to protect poor widows with young children. It has been expanded by statute beginning in 1851 and has never been clearly defined or tested by case law.

I have many clients who inquire about protecting their assets through trusts or other means. They generally steer away from trusts once they realize the control they must relinquish over assets in order for the trust to offer protection. While liability insurance offers protection of assets without giving up control, and is highly recommended, it does not necessarily cover all types of claims.

A husband and wife, both being over the age of 62, can apparently declare three Homesteads on their principal residence which will set aside for their benefit up to $1,500,000 in equity in said residence.

Declaring a Homestead is simple and inexpensive, it should be seriously considered by all homeowners.

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