Source: http://bbatrustsandestates.blogspot.com/2011_03_01_archive.html
Timestamp: 2013-05-18 18:06:58
Document Index: 713803163

Matched Legal Cases: ['§7', '§1', '§1', '§4', '§4', '§1', '§1', '§1', '§ 7']

Boston Bar Association Trusts & Estates Section: March 2011
On March 15, 2011, the IRS released the Form 709 with respect to gifts made during calendar year 2010, and the accompanying Instructions. The 2010 Form 709 may be found here.
Author: Robert H. Ryan, Esq., Bove & Langa, P.C.
On December 16, 2010, Governor Patrick signed Senate Bill 2406, AN ACT RELATIVE TO THE ESTATE OF HOMESTEAD (hereinafter referred to as the “Act”),[1] which is a complete revision of the Massachusetts homestead law. Although the statute will still be known as M.G.L. c. 188, the substantive provisions are much improved and, for the most part, clearer. This summary is intended to provide highlights to probate and trust and estate practitioners so that they may become familiar with changes that will become effective on March 16, 2011 (per Massachusetts legislative rules, laws generally become effective 90 days after the Governor signs the law). There has been considerable discussion regarding homestead protection during the past few years by many practitioners and several articles have appeared in Massachusetts legal publications highlighting problems with the law. Many of these problems have been addressed by the Act. Impact of Trust Ownership of Principal Residence on Homestead Declaration Under the Old Law
In a typical estate plan involving the use of trusts, the transfer of title of a principal residence is often done without proper consideration given to the issue of homestead protection. For several years, some practitioners have believed that a properly recorded homestead declaration on a principal residence could be preserved by reserving the homestead when a transfer of the principal residence was made to a trust. The authority generally cited for this position was c. 188 §7, where reference is made to termination of a homestead “by a deed conveying the property in which an estate of homestead exists, signed by the owner and the owner’s spouse, if any, which does not specifically reserve said estate of homestead {emphasis added}.” Accordingly, some practitioners believed that by specifically reserving a homestead when conveying the principal residence to a trust, the principal residence held in the trust would be protected by a homestead declaration. However, it is understood that the Land Court has strictly relied on the ruling in Bristol County v. Spinelli [2] that a homestead cannot apply to registered land held in trust. Therefore, there has been a question as to whether the Land Court would recognize the reservation of a homestead declaration for a conveyance of registered land to a trust. Since Spinelli did not address recorded land, some practitioners have also believed that a homestead declaration might be effective for recorded land conveyed to a trust.
A further issue of concern has been the determination of who benefits from the protection afforded by a homestead declaration. It is interesting to note that the old law clearly states that a c. 188 §1 declaration applies to a “family” as defined in the statute, which includes the declarant's children and spouse. For c. 188 §1 purposes, the statute applies even if a child is an adult. However, c. 188 §4 provides for the continuation of the homestead upon the death of the declarant. But in that instance, c. 188 §4 refers to the “minor” children of the declarant, raising a valid question as to whether a new homestead must be declared by the surviving non-declarant spouse in order to provide protection to an “adult” child who is a member of the family. If a couple owns a property as tenants-in-common, joint-tenants, tenants-by-the-entirety, or life tenants, the statute prior to the revision is clear that they are a family and a family can only record one c. 188 §1 homestead. Therefore, there is often a question as to which spouse should record the declaration of homestead. Generally, if the declarant spouse dies, the surviving spouse is protected. However, a c. 188 §1A elder and disabled homestead only applies to the owner who declared it and the homestead protection terminates at the same moment the c. 188 §1A declarant dies. Furthermore, at times there has been confusion in some of the Registries of Deeds as to whether each non-spouse co-owner of a principal residence may file a homestead declaration. In response to the uncertainty, the Chief Title Examiner for the Land Court issued a memo to the Registries of Deeds, dated August 25, 2006, which confirmed that multiple homestead declarations may be filed by unrelated co-owners. Questions About the Old Homestead Statute
4) Is a homestead terminated by transfers within the family or upon the death of the declarant? 5) Are the proceeds from a sale of the principal residence or insurance for a casualty loss to a principal residence protected by a homestead?
In response to concern that many homeowners are not aware of the requirement that a formal filing must be made in order to benefit from the homestead statute, the Act provides for an automatic allocation of homestead protection to a property that is the principal residence of the owner. However, the amount of automatic protection is limited to $125,000 of equity; a homeowner must still file a homestead declaration to benefit from the full $500,000 of equity homestead protection. The automatic homestead will apply to all existing principal residences as of March 16, 2011. Clarification of Extent of Protection for Multiple Owners
In recognition of the extensive use of trusts to hold title to principal residences, the Act finally extends the benefit of homestead protection to principal residences for which title is held in trust. In order to obtain such protection, the trustee must file a declaration of homestead stating, among other things, the names of the beneficiaries who seek to obtain such homestead protection, and the fact that the property is their principal residence. All in the Family
The Act provides that the transfer of a principal residence between family members does not terminate an existing homestead, even if the new deed fails to reserve the homestead upon the transfer. In addition, a homestead existing at the death or divorce of a person holding a homestead shall continue for the benefit of his or her surviving spouse or former spouse and minor children who occupy or intend to occupy said home as a principal residence. However, any adult child who has an ownership interest in the principal residence is required to file his or her own homestead declaration to take advantage of the increased protection of $500,000. Sales and Insurance Proceeds Relating to Homestead Property are Protected
Another age-old question relates to whether the apparent blanket waiver of a homestead in mortgage documents terminates the protection of a homestead against all creditors. The Act provides the sensible answer that a mortgage does not terminate a previously filed homestead but only subordinates the homestead to the specific mortgage at issue. Simple Solution to Which Spouse Files the Homestead
To resolve the question of which spouse should file the homestead the Act chooses a simple solution – it requires that both spouses who have an ownership interest in the principal residence sign the declaration of homestead. In addition, the declaration must identify each person receiving homestead protection, including the name of a spouse who may not be an owner. The declaration must also state that each person occupies, or intends to occupy, the property as his or her principal residence. New Act – New Questions
• Yes, even if it does not comply with the execution requirements of the Act (e.g., only one spouse named in the deed signed the declaration under the homestead statute before the revisions, whereas the Act now requires both spouses whose names are on the deed to sign the declaration). 2) Do I still need to file a Declaration of Homestead if I intend to file for bankruptcy?
• Yes, if you want to obtain the full exemption amount available under the Act rather than the lower exemption amount available per the automatic homestead protection. 3) Will the Homestead Declaration now apply against pre-existing debts without the need to file for Bankruptcy?
T&E Litigation Update - Gillespie v. Gillespie and Cosgrove v. Hughes
The decedent was survived by his second wife Peggy and his son Vincent. Vincent alleged that Peggy was liable to him for tortiously interfering with his expectancy by "hectoring" the decedent to execute a will largely in her favor, and was liable to the decedent's estate for wrongful death by forcing him to commit suicide through her cruelty. The superior court granted Peggy's motion for summary judgment with respect to both claims, and the Appeals Court affirmed. Judgment as a matter of law was entered on the tortious interference claim because Vincent never contested the decedent's will. Vincent's allegations of tortious interference amounted to an undue influence claim, and so this claim should have been raised during the probate of the will. The Court explained that Vincent did not have the choice of either submitting evidence of undue influence in opposition to the probate of the will or consenting to the allowance of the will and then attacking it in a tort action in superior court.
In Cosgrove v. Hughes, Case No. 10-P-338, 2011 Mass. App. LEXIS 211 (Feb. 15, 2011), the Appeals Court dealt with the question of what constitutes "acknowledgement" of paternity under the intestacy statute, G.L. c. 190, § 7. The facts of this case are interesting. In a very small nutshell, they are as follows:
Generally regarding the contradictory evidence as to Verna's relationship to the decedent, the Court noted that this evidence must be viewed against the backdrop of the shame and stigma for both mother and child attendant at the relevant times upon out-of-wedlock birth.
New Massachusetts Homestead Act, Effective March 1...
T&E Litigation Update - Gillespie v. Gillespie and...