Making Use Of a Homestead Statement to Safeguard a Home from Creditors

By signing a legal paper called a homestead statement, Montanans can secure as much as $409,450 (2025) in equity of their home against the majority of unsafe debts.

Equity is the distinction in between what an owner owes on a home loan and the current worth of the home. As an example, if a house owner documents a homestead statement and afterwards later on incurs frustrating financial obligations such as medical costs, the owner has protection up to $409,450 (2025) in equity of the home.

Unsecured debt is an obligation or debt without certain residential or commercial property like a home or auto, acting as security for settlement of the debt. Examples of unsafe financings are medical expenses, personal car loans, pupil fundings, and bank card. This MontGuide responses frequently asked questions about a Montana homestead statement.

Just how is ‘homestead’ specified in Montana?

A homestead is the house a person stays in and the arrive on which it stands.Read more Montana Premier Scholarship At website Articles The home should be an individual’s key home to be eligible for a homestead statement. A mobile home or produced home is also eligible for a homestead affirmation. The proprietor does not need to own the land under which the
mobile or manufactured home is set. Nonetheless, the owner has to live in the mobile or manufactured home to get a homestead declaration.

The term homestead also includes any renovations legally defined as ‘appurtenances’ to the land, such as a fence, separate garage, and wells used for residential water usage. Nonetheless, the enhancements can not go beyond the amount of the homestead declaration exemption of $409,450 (2025 ). Furnishings and home appliances are not qualified for the homestead statement.

How is the annual increase in the Montana homestead declaration calculated?

The legal worth of the residential or commercial property for figuring the equity held by the proprietor is the buck value showing up on the current county evaluation at the county treasurer’s office. The 67th Montana Legislature passed a law needing the homestead declaration to enhance by four percent every calendar year after 2021. In 2025, the homestead exception is $409,450, $425,827 in 2026, and $442,659 in 2027.

Do I need to refile my Montana homestead declaration if I filed one prior to May 10, 2021?

No. The Montana legislature supplied rises in the homestead statement with the preliminary defense of $40,000. Numerous years later, the amount was boosted to $60,000; then to $100,000, $250,000, and $350,000. As a result of the continuing modifications in the homestead declaration, one does
not require to provide the buck amount on the kind. The exception permitted is the quantity allowed the year one takes advantage of the statement to secure a home from creditors’ claims.

What happens if the equity in my home goes beyond the Montana homestead exception?

If the value of equity in a home goes beyond $409,450 (2025 ), financial institutions may request the area court judge to divide (dividing) the land and market component or all of it. The individual who filed the homestead affirmation has security for the first $409,450 (2025) in equity of the sale profits. These earnings are excluded for 18 months from unsecured lender’s cases.

Example: Joe has a residence with a worth of $300,000 and a $50,000 home loan balance. Joe’s homestead affirmation shields just the $250,000 he has in equity ($300,000 worth – $50,000 home mortgage = $250,000) even though the optimum homestead affirmation exception is $409,450 (2025 ).

Example – Ownership: Karen has a home with a value of $425,000 with a home loan balance of $10,000. Her equity in the home is $415,000 ($425,000 – $10,000 mortgage = $415,000). Karen’s homestead declaration just safeguards approximately $409,450 (2025) of her equity in the home. The continuing to be quantity over the equity she has in the home ($5,550) is available to unprotected financial institution’s cases. Lenders could require the sale of Karen’s home to recuperate part or every one of the financial obligation she owes them.

Does the means residential property is labelled effect the Montana homestead declaration?

Montanans usually possess property labelled in among three methods: sole ownership, joint tenancy with right of survivorship or tenants in common. In recent times, some Montanans have placed their home in revocable counts on.

If a proprietor has the title in sole possession, the owner has the complete $409,450 (2025) homestead exemption.

If a person is a co-owner of real property entitled as a tenantin-common, each has a wholehearted rate of interest in the residential or commercial property as written on the act or otherwise symmetrical if not especially composed otherwise. If 2 individuals title their home as tenantsin-common, each has half of the concentrated passion in the home. Jim has half possession and Sally, as the other tenant-in-common, has the various other half possession.

An act can reveal any kind of proportion, such as Jim with 75 percent possession and Sally with 25 percent or Jim with 60 percent possession and Sally with 40 percent. When a tenant-in-common documents a homestead declaration, the exemption quantity is proportional to the concentrated rate of interest each possesses.

Example – Tenants in Common: Debbie and Mike own a home as tenants-in-common. The value of the home is $500,000. They have a $50,000 remaining balance on the home loan. Their incorporated equity in the home is $450,000. Debbie has a concentrated interest of fifty percent ($225,000) and Mike has an undistracted rate of interest of half ($225,000). ($500,000 value – $50,000 staying equilibrium on lending = $450,000 incorporated equity – 2 = $225,000). Mike and
Debbie can each file a homestead affirmation for their corresponding undistracted rate of interest of half.

If the title is in joint occupancy with right of survivorship, then any one of the joint owners have the complete exemption of $409,450 (2025 ). Nonetheless, all proprietors must sign the homestead declaration, actions, and any associated building records such as a home mortgage similarly.

Instance – Joint Occupancy with Right of Survivorship: Heather and Noah have a home with a worth of $425,000 as joint occupants with right of survivorship. They authorized the deed and title to their home as Heather Ann Mason and Noah Lee Mason. They authorized the homestead affirmation the same way. They have a $50,000 continuing to be balance on the home mortgage. Their joint equity in the home is $375,000 so that is the amount of equity either Heather or Noah can safeguard against unsecured lender claims.

If the title is in the name of a revocable trust fund the settlors (those who develop the count on) have the complete exception of $409,450 (2025 ). Settlors are the ones who put assets for the trust fund. The settlors could include a declaration in their declaration wording to the list below result: We are settlors of a revocable trust fund, and we transferred the defined residential property to that trust.

Example – Revocable Trust: As part of their estate plan, Cindy and Tom have placed their home in the name of their revocable trust fund. The name they chose for the trust is: The Cindy Brown and Tom Brown Revocable trust developed June 17, 2025. The worth of the home in the name of the count on is $500,000. Due to the fact that they have no home loan, their equity in the home is $500,000. The quantity of equity protection they have is the optimum exemption of $409,450 (2025 ).

If a pair is wed, should both sign the Montana homestead declaration?

Yes. Under Montana property regulation, a spouse gets a passion in residential property at marital relationship unless an authorized premarital arrangement contract exists. To learn more, see MSU Expansion MontGuide, Premarital Arrangement Contracts in Montana: Financial and Legal Aspects or request a copy from a regional MSU Extension office.

Although a spouse’s name might not appear on the action or other records of title, the spouse has a legal passion in the property as a result of the marriage. For this reason, both spouses should authorize the homestead declaration. If one partner does not sign, that spouse’s passion in the residential or commercial property is not exempt from unsecured creditor’s claims.

Recap

If a Montana property owner files a homestead affirmation, up to $409,450 (2025) of the homeowner’s equity in the home, mobile home or manufactured home can be safeguarded versus most unprotected creditor’s claims. The proprietor finishes, signs, and has the Montana homestead statement notarized. The owner after that submits the file in the workplace of the staff and recorder in the county in which the home is discovered. If wed, both partners have to authorize the statement and literally live in the home.