Homestead exemptions can be a great tool for Asset Protection, depending
on the state in which you live. The homestead exemption helps protect
your home from creditors. Homestead laws apply only to your primary residence
which is a property that you own and occupy as your home, and that you
consider your domicile. Each state has its own specific laws and requirements
for protection. The homestead exemption is an automatic benefit in some
states, while some states require you to file a claim to receive it.
Once you have claimed homestead status by meeting your states’ specific requirements, it is important to know how far the protection extends. There are certain situations in which creditors can in fact override homestead protection and claim the homesteaded property. Some examples where homestead protection can be overridden are:
- Against the IRS and other federal agencies. If you owe federal taxes or are sued by the SEC or the EPA, for example, you might lose your protection.
- Against the tax collector. Your homestead laws may or may not protect your home from the state tax collector
- Against spouses in a divorce or family members who challenge their inheritances can also override the homestead laws.
- Against plaintiffs suing for intentional torts (libel, fraud, deceit, etc.).
- Against mortgages or deeds of trust, voluntarily granted to creditors as collateral, are unaffected by homestead. These lenders have full recourse to the home as do creditors where you specifically waive your homestead protection.
- Some state homestead laws only protect the home against debts incurred after the homestead protection was claimed. This is a common restriction.
The homestead law exemption is a significant part of Asset Protection Planning but it does not provide 100% protection in all circumstances. Combining your homestead protections with other Asset Protection tools to create multiple levels of protection is the only way to achieve efficient protection. If you would like to speak with an attorney specializing in Asset Protection, please reach out to us today.
The Presser Law Firm P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(800) 999-9992 or e-mail Info@AssetProtectionAttorneys.com