703 vs 704 Exemptions
As of January 2024 the automatic and declared homestead exemptions have increased from $678,391.00 to $699,421.00.
The automatic exemption applies to homeowners' primary residences without the need to file any formal declarations. It protects a certain amount of equity from being forced to sell by creditors. The amount of protection depends on various factors such as age, family status, and income. Automatic homestead only applies to forced sales; it does not protect homeowners from voluntary sales to pay debts. The homeowner must be formally declared with the county's recorder's office to obtain the declared homestead status. The declared homestead offers additional benefits to the homeowner in legal proceedings. A declared homestead owner is allowed limited time to reinvest in a new home while the equity is protected.
Both sets of exemptions allow joint-filing couples to double their use of the exemption in one way or another. The 703 "Wildcard" Exemption will enable debtors to protect a certain amount of property. A married couple filing jointly can generally double the wildcard exemption. Each spouse can claim the exemption amount for their share of the property they jointly own, doubling the total exemption amount. The 704 Homestead Exemption protects a certain amount of equity in the debtor's home, which is fixed and cannot be doubled even during a joint filing.
Both 703 and 704 exemptions typically protect public retirement benefits, private retirement plans, and specific public employee pensions, including:
- Social Security Benefits
- Unemployment Compensation and Benefits
- Local Public Assistance Benefits
- Veteran's Benefits
- Disability or Illness Benefits
- Alimony, Child Support, Separation Maintenance
- More with particular conditions
Debtors with personal injury compensation or settlement would benefit more from the 704 exemptions as it provides an unlimited exemption. The 703 exemptions only offer $31,950 for personal injury compensation or settlement.