New Homestead Law is Welcome Change to Homeowners

On December 16, 2010, Senate Bill 2406, an Act Relative to the Estate of Homestead, was signed into law by Governor Deval Patrick. The new law which replaces the Commonwealth’s existing Homestead Law will take effect ninety days after it’s signing, March 16, 2011, and clarifies ambiguities present in the existing Homestead Law while taking into consideration today’s complex financial transactions and modern households. The hallmark of the new law is that it provides for an “automatic” Homestead or protection against unsecured creditor claims of up to $125,000 in a homeowner’s equity in their primary residence. The scope of the new law extends to the proceeds from insurance as well as from the sale of a home and safeguards homeowners of two to four family and mobile homes.

Here at Konowitz & Greenberg, we continue to encourage our clients to have a Declaration of Homestead prepared and recorded with the Registry of Deeds where their primary residence is located as this protects a homeowner’s equity up to $500,000. The Homestead Estate is designed to protect home ownership from execution and forced sale, so long as the owner or covered family member occupies or intends to occupy the property as his or her principal place of residence.

If you have any questions regarding the new Homestead Law or other estate planning matters, please contact us for a consultation.

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