... And The Scams Just Keep On Coming

For some unscrupulous types, troubled times represent an opportunity to take advantage of people when they are at their lowest. In today's Boston Globe, reporter Eileen AJ Connelly reports on yet another type of scam that is being perpetrated against homeowners in financial trouble. This new industry of "foreclosure rescue companies" purports to offer troubled mortgagors assistance in working out loan modifications. They disseminate written materials which look like official IRS or governmental communications but in fact are not. These companies prey on unsophisticated homeowners who may be grasping at any way to keep from losing their homes. The full article can be found here:
http://www.boston.com/business/personalfinance/articles/2009/05/29/if_youre_in_trouble_with_your_mortgage_beware_of_those_who_offer_to_help/

Once again, let the buyer beware. Don't be fooled!

Thinking of Buying a Condo?

Secondary mortgage market lenders have implemented a new and stricter set of lending guidelines which may make it more difficult for some buyers to purchase a condominium. Some of the new regulations include:

1. At least 70 percent of units in a new complex must be sold or under contract for purchase as a principal residence or second home.

2. No more than 15 percent of units in a complex may be 30 days or more past due on condo fees.

3. Insurance requirements have been made stricter.

4. Buyers must make a down payment of at least 25 percent to avoid a higher fee or interest rate.

Read the full report in the May 23, 2009 issue of the Boston Globe at http://http://www.boston.com/business/personalfinance/articles/2009/05/23/new_rules_on_condo_loans_hindering_some_buyers/.

New York Times: Lenders More Open To Short Sales

When the value of a home is less than the amount of outstanding debt secured by the home, the homeowner is in an untenable predicament. In this circumstance, if the property is to be sold, the owner must either bring funds to the closing table to pay off the debt, or negotiate a "short sale" with the lender (see my blog post dated January 6, 2009). If neither option is available, the homeowner may face foreclosure. Lenders, particularly home equity lenders in second position, have been reluctant to agree to short sales, but the New York Times now reports that this method for escaping foreclosure may be getting a little easier to navigate. Whereas to this point second lien holders often resisted agreeing to short sales, mortgage lenders say they are now working more cooperatively on short sales, and proposed changes in the industry could increase the number of these transactions. To read this New York Times report, click here: http://www.nytimes.com/2009/05/17/realestate/17mort.html?emc=tnt&tntemail1=y.

Estate Planning for Blended Families

Estate planning in the best of circumstances can be a challenging process, but it can become even more complicated when dealing with the issue of blended families. In a time when divorce and remarriage are common, many families include children from previous marriages, and the decisions as to who will inherit what may be complicated by the complex relationships among parents, step-parents, step- and half-siblings and other family members.

It may be only natural to want to pass on your assets to your biological children, but you may also want to provide for your subsequent spouse and even stepchildren. Balancing these sometimes disparate considerations can be a complicated and challenging experience. Even when blended families get along, the potential for acrimony, disagreement and even litigation among the different family segments exists.

At a minimum, each spouse of a subsequent marriage should have a will. In the absence of a will, as a result of the laws of intestate distribution, assets are likely to pass in ways which are inconsistent with your intentions. Yet a better approach is also to establish a trust, which will permit you to provide for the surviving spouse and still protect a portion of your assets for your children of a prior marriage.

Issues to be considered when planning for a blended family may include the following:

1. Are your beneficiary designations up to date? Have you successfully removed your ex-spouse from receiving any of your assets? In certain cases a beneficiary designation may trump a divorce decree or the terms of a will. Be sure that you have removed your former spouse as beneficiary in all cases and designated beneficiaries consistent with your current wishes.

2. Determine what you wish to leave to your new spouse and stepchildren, and what you wish to leave to your children, whether of the current marriage or a prior marriage. Consider the needs of all parties and strive to ensure that the assets are distributed in a way that reflects your goals. Establishing a trust can eliminate the possibility that the subsequent spouse will have the authority to change beneficiaries and disinherit children from a prior marriage after your death.

3. Consider establishing a prenuptial or postnuptial agreement which sets out the distribution of finances and properties upon your death.

4. Consider the purchase of life insurance as an effective way to provide a known amount to children from a previous marriage.

The most important thing you can do when planning for a blended family is be honest and open. Communicate your priorities and your wishes, and speak frankly but openly with your spouse, children and step-children so that all understand your intentions in making the decisions that underlie the estate plan. Such communication is crucial to avoiding ill will and resentment among survivors after your death.

More Thoughts on the Estate Tax Laws

The New York Times has published several interesting articles on the current state of the estate tax laws, the probable extension of the current tax rate and exemption amount, and the impact of these matters on your estate plan. For some informative reading, see the following articles:

"Study Estate Plan Before Laws Shift", February 25, 2009
http://www.nytimes.com/2009/02/26/your-money/estate-planning/26estate.html?scp=1&sq=Laws%20Shift&st=cse

"Smaller Though It May Be, It’s Time to Look at the Estate", March 20, 2009
http://www.nytimes.com/2009/03/21/your-money/estate-planning/21wealth.html?scp=6&sq=&st=nyt

Declarations of Homestead

If you are a homeowner in Massachusetts, you are entitled to the protections afforded by a Declaration of Homestead. A Declaration of Homestead is filed at the Registry of Deeds in the county where the property is located, and allows homeowners to protect up to five hundred thousand dollars ($500,000) of the value of their primary residence, per family, against any attachment, levy, execution or sale to satisfy debts arising subsequent to the date of the Homestead filing. Any owner occupying a home as a principal residence may file for the Homestead protection. Presently, only one owner may file a Homestead, though if you are married and own the property with your spouse as tenants by the entirety, both spouses and family members receive the benefit of the Homestead protection.

Certain claims are exempt from the Homestead Law. Matters against which a Homestead will not protect include (a) federal, state and local taxes and other liens; (b) mortgages used to purchase the home; (c) orders for payment of spousal or child support; (d) judgments based upon fraud, mistake, duress, undue influence or lack of capacity; and (e) debts contracted prior to the acquisition of the Homestead.

Under the current Homestead law, there are certain questions whose answers are not clear. May a person who owns a home in Trust file a homestead? If a homeowner refinances a first mortgage, is the Homestead terminated? Why is the Homestead available to only one homeowner?

A bill is currently pending in the Massachusetts legislature which would provide the answers to these questions. If the pending bill is passed, it will automatically protect up to $125,000 of equity protection to all homeowners, whether or not a Declaration of Homestead is filed. A filing will continue to protect up to $500,000 in home equity. The Bill will also allow both spouses to file, even if only one spouse is on the title to the house. The Bill would specifically permit filings on homes owned in Trust and protect beneficiaries of trusts which hold title to their principal residence. Finally, the Bill would prohibit mortgage lenders from requiring the release of a homestead in order to secure a refinancing mortgage and will verify that any language in a mortgage purporting to terminate a Homestead will be construed not as a termination of Homestead rights, but as a subordination of those rights to the lender. Stay tuned for the outcome of the vote on this bill.

A Declaration of Homestead is an easy way to protect the equity in your home, but it must be filed for you to have the protections. If you are unsure whether you have a Declaration of Homestead on file, it is simple both to verify and to file as needed.

It's An Honor To Be Recognized

I am so honored and proud to share the news that I have been recognized by the Boston Women's Business Journal as one of "The Top Ten Lawyers" in their April, 2009 issue. The selections are made based on nominations submitted by clients and colleagues. I am grateful to Susan Liberman of Karp, Liberman & Kern Sotheby's International Realty for submitting a nomination on my behalf. While my true professional satisfaction comes from the relationships I have with my clients and the ways in which I am able to provide assistance, it's certainly wonderful to be recognized for the quality of my skills and services. If you are interested in seeing the complete "Top 10" list, click here http://http//www.bostonherald.com/business/womens/general/view/2009_04_01_Women_s_Business_Top_10_Lawyers/