Homestead Declaration, Protect your home from creditors

By signing a legal document known as a homestead declaration, Montanans can protect up to $250,000 in value of a home against most creditors’ claims. For example, if a person incurs an overwhelming gambling debt, up to $250,000 in value of his/her home would still be sheltered.

The purpose of this MontGuide is to provide Montanans with information about establishing a homestead declaration. Also included are homestead declaration and declaration of homestead abandonment forms.

What is a homestead?
A homestead is the house or mobile home that a person lives in and land on which it sits. The property must be a person’s primary residence for it to be eligible for a homestead declaration. The term homestead also includes any improvements legally defined as “appurtenances” to the land, such as a fence. However, home furnishings and appliances are not eligible for the homestead declaration.
Limit on dollar value.

The maximum value of exempt property for a homestead declaration is $250,000. The legal value of the property is the amount appearing on the last completed county assessment roll at the county treasurer’s office. The previous value of exempt property was $100,000. If a person filed a homestead declaration under the prior value, he or she does not need to refile to receive the $250,000 exemption. If the value of the property exceeds $250,000, creditors may request the district court judge to partition the land and sell part of it or all of it. If property is sold, the person who filed the homestead declaration has protection for the first $250,000 of proceeds. Sale proceeds up to $250,000 are exempt from creditors’ claims for 18 months.

Example 1: Joe owns a house that has an assessed value of $80,000 with a $50,000 mortgage balance. Joe’s homestead declaration protects only the $30,000 equity Joe has in the house, even though the maximum exemption is $250,000 ($80,000-$50,000 =$30,000).

Read more about homestead declarations from MSU Extensions 115 Culbertson Hall, Montana State University, Bozeman MT 59717