On December 17, 2010, Govenor Deval patrick signed into law a bill that will allow Massachusetts homeowners to better protect their family home from debt collectors. This legislation will take effect on March 16, 2011, and will essentially modernize an antiquated verison of the Massachusetts Homestead Act.
The Massachusetts Homestead Act is extremely important because it protects homeowners from losing their homes if creditors attempt to attach liens aganist their properties as well as prohibits debt collectors from compelling the sale of a home in order to pay debt collectors from compelling the sale of a home in order to pay debt. This new legislation will expand coverage for homeowners as well as clear up some uncertainty that was created by the law which was first enacted in 1851. Previously, the statue provided $500,000 in protection from creditors, but only for those homeowners who filed a written declaration with the Registry of Deeds, which can cost between $35 and $100. Under the new act, all Massachusetts homeowners will receive an automatic homestead exemption of $125,000 on the principal residence if they hold that much equity in their properties. This will help reconcile complaints that the previous law was unfair to homeowners who did not possess the training or legal advice to assist with the declaration filing process. For those homeowners who still seek $500,000 in protection, they will still be able to receive this declared homestead exemption by filing a written declaration of homestead at the Registry of Deeds.
Here's a list of other significat changes the Massachusetts Homestead Act will provide:
- For married couples or for any other co-owners, both owners must execute the declaration to received the $500,000 declared homestead exemption. Previously only one owner was allowed to file declaration.
- If you owned a homestead while single and you later get married, the homestead will automatically protect your new spouse.
- Homesteads will now pass on to the surviving spouse and children who live in the family home should death or divorce of a person holding the homestead occur.
- Homesteads are now available on 2 to 4 family homes, manufactured homes, and homes held in trust.
- If a home is owned by two elderly or disable persons, the total exemption in the home can amount to $1,000,000.
- No longer necessary to re-file a homestead after a refinance. Previously lenders required homeowners to either subordinate or release homesteads. Under the new law, homesteads automatically subordinate estates or homestead to mortgages and lenders are prohibited from requiring borrowers waive or release a homestead.
- If Massachusetts homeowners previously declare an estate of homestead at the Registry of Deeds, there is no need to re-file, as you will still receive the benefit of $500,000 in protection.
- Home equity also remain intact if a family member transfers a house to another relative.
Most importantly, the new and improved Massachusetts Homestead Act will protect the growing number of Massachusetts homeowners who find themselves in debt and who would otherwise be at risk of losing their homes to creditors who are seeking to collect those debts.
When it comes to marriage, many couples used to think all you need is love. But with increasingly difficult economic times, many now find they also need a prenuptial agreement. Seventy-three percent of divorce attorneys reported seeing an increase in demand for prenuptial agreements over the past five years, according to a recent survey conducted by the American Academy of Matrimonial Lawyers in September 2010. What may come as somewhat of a surprise is that 52 percent of these attorneys also said they have seen a rise in the number of women initiating these requests.
In order to understand these findings, one must look to the economy. While many once thought prenups were only for celebrity couples or those with substantial assets, prenups have taken on a greater significance for middle-class couples. With the recession having such a negative widespread effect on employment rates and financial savings, couples are now focusing their attention on their assets and how to protect them. For those who have had their finances reduced, what they are left with is of greater importance to them and is worthy of safeguarding.
It is a reality that retirement accounts have been hard hit in the last few years, so people do not want to have their retirement account diminished twice, once when the market weakened and again during divorce. Now, a commitment to marriage often includes the commitment to protect premarital assets, pensions and retirement accounts. Thirty-six percent of the attorneys surveyed agreed that they have witnessed an increase in retirement savings being a part of the prenuptial agreement.
The rise in the number of women initiating prenuptial agreements may be attributed to the fact more women are working outside the house and many have a greater earning potential than their future husband-to-be. Therefore, these women instinctively want to protect what they have worked so hard to earn. On the other hand, many women who leave the job market to become the primary caretaker of a child, may want protections outlined in a prenuptial agreement to ensure they are not left struggling to survive in the even their marriage ends.
Since the divorce rate in America is hovering around 41 percent, it is of no surprise that couples want to plan ahead for their future. Many baby boomers’ children are now of marrying age and have experienced divorce in their childhood, so many want to avoid the arguments and problems their parents encountered during divorce. A prenuptial agreement provides a solution to this.
While prenuptial agreements may be gaining in popularity, they will continue to be a controversial topic in any household. Many feel that a prenup creates a level of distrust among the couple which leads to inevitable divorce. A more positive view is to consider marriage as a partnership. In order to have a successful partnership, parameters need to be drawn to define the relationship and address contingencies such as dissolution of the partnership. With this in mind, a prenuptial agreement can also be considered an estate planning opportunity for couples to create more certainty in these uncertain economic times.
