More Questions and Answers about Declarations of Homestead in Massachusetts

The Massachusetts law regarding Declarations of Homestead has never been very clear.  Having already answered some typical questions in http://elderlawblog.info/2010/04/20/questions-and-answers-about-declarations-of-homestead-in-massachusetts, here are some other questions I’ve been asked by clients during our conferences.

Can I file more than one type of homestead?

Through a process known as stacking, it is possible to file more than one type of homestead.  Under current law, each one would protect $500,000 of the value of the primary residence.

What happens to my Declaration of Homestead after I die?

What happens to your homestead when you die can vary based on the homestead type. The Elderly and Disabled types do not allow any protection to anyone after your death, so a creditor can sue your estate without concern for an Elderly or Disabled Declaration of Homestead. The regular type, however, continues after your death to protect your spouse and minor children. If you have minor children, the problem with the regular Declaration of Homestead (unless special language is added) is that their right to live there can complicate a sale or refinance.

My husband is in a nursing home, so should he file a Declaration of Homestead? As described in the previous answer, a regular Declaration of Homestead would protect your right to continue to live in the home after his death.  The better move in many situations, however, may be for him to deed the home to your name, since transfers between spouses are allowed under Medicaid and MassHealth laws and regulations.  If he keeps the home in his name but you die first, he’ll end up being the sole owner of the home, and after he dies MassHealth would have an estate recovery claim against his estate for repayment.

What’s better, a Declaration of Homestead or an umbrella policy?

I’d say an umbrella policy is more important to a typical person than a Declaration of Homestead.  For a Declaration of Homestead to have any value for you, you’ve been sued and you’ve essentially lost everything else and have ended up in bankruptcy.  An umbrella policy has the potential to protect all of your assets against major claims and to keep you away from bankruptcy.

Can a person whose home is in a trust file a Declaration of Homestead?

Ambiguities in Massachusetts law are supposed to be decided by Massachusetts courts, but no case regarding the homestead law has yet been decided by the top court, the Supreme Judicial Court of Massachusetts.  Lower Massachusetts courts have held that a home in a trust is not protected by a Declaration of Homestead.  A 2010 case in federal Bankruptcy Court, however, has interpreted Massachusetts homestead law as allowing a person whose home is in trust to file a Declaration of Homestead, so at this point it appears that a person whose home is in a trust can protect the home by filing a Declaration of Homestead.

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