An article by Kate Murphy in the September 2, 2010 New York Times provides a good discussion of homestead exemptions.
“Homestead exemption” can have two completely different applications. Some states and localities use that term to refer to real estate tax breaks for senior citizens and others. The term can also refer to the extent to which your house is shielded from creditors. For example, Florida shields virtually all the equity in your house from most creditors. Other states provide little or no shelter for your home. Having your permanent residence in a state like Florida can provide great advantages from an asset protection standpoint. I provided some detailed information on this topic in a post on June 30, 2009.
Dwight Merriam, chairman of the state and local government law section of the American Bar Association, makes an important point in the New York Times article: each state is different and anyone concerned about having the homestead exemption available to them should check carefully and perhaps engage an attorney to advise them.
Whenever I am working with a client on asset protection matters, the client’s home is generally at the center of our discussions. So I am always glad to see homestead exemptions getting some media attention.