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Using a Homestead Declaration to Protect Your Home From Creditors

Using a Homestead Declaration to Protect Your Home From Creditors. MontGuide 199815. Revised May 2012.

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Using a Homestead Declaration to Protect Your Home From Creditors

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  1. Using a Homestead Declaration to Protect Your Home From Creditors MontGuide 199815 Revised May 2012

  2. Marsha A. Goetting Ph.D., CFP®, CFCSProfessor & Extension Family Economics SpecialistDept. of Agricultural Economics & EconomicsKeri D. HayesPublications AssistantDept. of Agricultural Economics & Economics

  3. Protection • Now up to $250,000 in value of a home against most creditor claims

  4. Prior Law • Exempt Property • $40,000 • $60,000 • $100,000

  5. If previously filed declaration • Don’t have to refile to receive $250,000 protection

  6. What is a Homestead? • House, condo, townhouse, manufactured home or mobile home • Land on which it sits • Any improvements, fences, etc.

  7. Manufactured Home or Mobile Home • Owner does not have to own the land the mobile home/manufactured home is sitting on

  8. Homestead • Must be person’s primary residence

  9. Not Eligible • Doesn’t include: • Home furnishings • Appliances

  10. Legal Value • Amount appearing on the last completed county assessment roll • From county treasurer’s office

  11. Example: • Joe’s house: • Assessed value $80,000 • Mortgage Balance $50,000 • Protection $30,000

  12. Example: • Doug & Laura’s house: • Assessed value = $275,000 • Mortgage Balance = $ 10,000 • Remaining Balance = $265,000 • ****BUT, Maximum Protection is $250,000

  13. Who Should Sign? • Both spouses should sign the declaration • Must be notarized

  14. Who Should Sign? • A spouse may acquire interest in property at marriage unless there is a premarital agreement

  15. Tenants in Common • Each own individual interest • Can only file for portion of undivided interest

  16. Tenants in Common: • Jack and Jill • Each can file for ½ of $250,000 or $125,000

  17. Standard Form MSU Extension: www.montana.edu/extensionecon/financialmgtpublications.html 17

  18. Homestead Declaration Form • A document that does not meet the requirements is considered Non-standard • Montana Code Annotated • §7-4-2636

  19. Undo a Declaration • Declaration of Abandonment form • www.montana.edu/extensionecon/financialmgtpublications.html

  20. Record • Clerk and Recorder’s office • In the county where the home is located

  21. Recording Fees • Standard form • $7.00 per page • Non-standard form • $7.00 per page plus $10.00

  22. No Protection • Creditor obtains judgment against the homeowner before declaration is filed

  23. No Protection • Against liens for • Services • Supplies

  24. No Protection • Failure to pay the mortgage

  25. No Protection • Bankruptcy, unless filed before bankruptcy was declared

  26. No Protection • Medicaid Estate & Recovery Program • Lien on home of homeowner in a nursing home whose medical costs were paid by Medicaid

  27. MontGuide on the Web www.montana.eduSearch “Homestead Declaration”

  28. Using a Homestead Declaration to Protect Your Home From Creditors MontGuide 199815 Revised May 2012

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