Wearing my estate planning and real estate thinking caps, I dug deep into the new Massachusetts Homestead protection Act entitled “An Act Relative to the Estate of Homestead” that Governor Patrick signed into place on December 16, 2010. This new law is set to take place in March (per the usual 90 day grace period to enable us all to adjust accordingly).
Why should you care? Well, for estate planning purposes (because this is a blog about Massachusetts Wills, Trusts, and Estates after all), there are 3 reasons mainly:
1. This law protects the value of your family home that you usually live in automatically up to $125,000 or up to $500,000 if you file, if, for instances, you rack up an outrageous amount of credit card debt or get in an accident and a court orders you to pay someone damages as a result. But let’s not get crazy here; you can’t avoid a mortgage, child support, alimony, back taxes, or a prior lien on the home.
2. Under Section 5(a)(3) of the new law, married couples now both execute the document and file together. This may seem like one small step but it’s actually a giant leap forward for womankind here in Massachusetts as we climb out from under the Doctrine of Coverture (or the seriously arcane notion that women are their husbands’ property). But don’t worry if only one of you filed for homestead protection previously, because your homestead is “grandfathered in” and continues in full force and effect.
3. This law also clarifies some of the confusion that previously existed around homestead protection for homes held in trusts. Under Section 1, an “owner” can be “the holder of a beneficial interest in a trust” and under Section 5(a)(4) only the trustee of a trust can file for a home owned by that trust. That means that in serving as trustee of the Revocable Living Trust that is the cornerstone of your family’s estate plan, you can file for homestead protection for your family’s home. Section 10((b) also seems to put to bed any concerns about inadvertently terminating an existing homestead by transferring the property from individual or married owners into trust. That would make the recording of a new homestead unnecessary where, for example, a married couple transfers property from themselves as tenants by the entirety to themselves as trustees of their living trusts.
Hmmm, something tells me you’re probably not nearly as excited about these developments as I am. Any questions? Bueller? Bueller? If you recently bought property here in Massachusetts talk with your estate planning attorney to review how you took title when you bought your new home and learn how to make sure that asset, likely your largest, is protected for your family.