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Home » Homestead Exemption » Homestead Protection Of Insurance Proceeds Paid For Sinkhole Damage

Homestead Protection Of Insurance Proceeds Paid For Sinkhole Damage

ByJon Alper April 12, 2012May 22, 2020

This past week a client asked me about exemption of an insurance proceeds from a claim made on his homestead.  First, a homeowner’s primary house was damaged by a small sinkhole.

The insurance company wrote him a check equal to the repair costs. The homeowner is considering abandoning the home and depositing the check in a bank account while he searches to rent or buy a new home. He asked whether the insurance money is protected in his bank account.

I think that insurance proceeds paid for damage to a homestead represent “homestead equity” and are generally exempt. If the homeowner intends to reinvest the insurance money in a new home then the money is protected in his bank account while he looks for a replacement home for a reasonable time.

If, and when, he abandons the ideal of buying a new home and instead moves into a rental property with a long-term lease I think the money would no longer be exempt under the homestead umbrella. If he rents a space on a short term basis while he searches for a new home to buy then the funds are still exempt- again, for a reasonable time.

Last updated on May 22, 2020

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Jon Alper

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      • Business Entities
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      • LLC Operating Agreement
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      • Nevis LLC
      • Offshore Bank Accounts
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      • Judgment Collection
      • Bitcoin and Cryptocurrency
      • Deficiency Judgments
      • Fact Information Sheet
      • Head of Household
      • IRS Tax Debt
      • Not Paying Judgments
      • Statute of Limitations
      • Wage Garnishment
      • Writ of Garnishment
    • Wills and Trusts
      • Avoiding Probate
      • Estate Planning
      • Gun Trusts
      • Inheritance Tax
      • Irrevocable Trusts
      • Last Will and Testament
      • Living Trusts
      • Living Will
      • LGBT Estate Planning
      • Power of Attorney
      • Probate
      • Special Needs Trust
      • Trust Administration
    • Bankruptcy
      • Attorney Fees
      • Chapter 7 Bankruptcy
      • Chapter 13 Bankruptcy
      • Dealing With Creditors
      • Involuntary Bankruptcy
      • Moral Issues
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