When many people think of the word “homestead,” they may think of where Roy Rogers and Dale Evans might have lived, but in fact, a homestead is a legal concept by which your home or a significant amount of the equity in it is protected from the claims of most creditors. Florida and Texas are two states that protect the entire value of the home from the claims of creditors. In addition, most states will allow you, subject to certain time limitations, to sell your home and take the proceeds from that sale to purchase another home, which in turn will be protected from your creditors through homestead protection.
Because the states, when they passed homestead laws, continued to adhere to their version of the Golden Rule (if you have the gold, you make the rules), the homestead protection laws do not protect your home from debts owed to any form of government for things such as real estate taxes or income taxes. Homestead protection and the procedures for establishing it vary from state to state.
In addition, and most important, many people mistakenly think that a homestead declaration protects their home from Medicaid. It will not.