Parker Scheer

Congress last fall amended the Bankruptcy Code in many significant ways. One aspect is how much of the value of your home you can protectfrom creditors.

This is significant for people who are interested in asset-protection plans designed to shelter their wealth.

Recent court rulings suggest that a “cap” of $125,000 applies to the equity developed in a home in the roughly three years prior to someone filing for bankruptcy.

This new law likely means that a home will have to be valued on the date a bankruptcy is filed, as well as three years earlier. The reason: To the extent the net equity increased by more than $125,000 in that time period, the excess is an asset available to satisfy the claims of creditors. (Massachusetts has its own separate laws that can protect some of the value of a home from creditors.)

As part of your overall estate planning, you can protect your assets in many ways long before any risk of bankruptcy arises.

One way is to place assets in a variety of trusts. Another option is for spouses of self-employed individuals to be the sole owner of major family assets.

Massachusetts allows married couples to own real estate as a “tenancy by the entirety,” such that a judgment against one of the spouses can’t encumber the property. This means creditors of one spouse cannot reach the principal residence of the couple.

Passenger in SUV May Be at Fault for Accident

It’s a common occurrence: A passenger in a car tells the driver it’s safe to back up on to a road.

But what happens if an accident occurs? Can the passenger be sued?

According to a Florida appeals court, the answer is yes.

A passenger who volunteers to assist a driver in determining if a path of travel is clear and safe has to do so with reasonable care, the court said.

In this case, the defendant was a passenger in a SUV. He told the driver that the road was clear for him to back up. But the vehicle struck a motorcycle behind it injuring the passenger on the motorcycle.

The motorcycle passenger alleged that the SUV passenger agreed to help the driver determine if it was safe to back up, and that he was better situated than the driver to make that determination.

The court noted that an action taken for the benefit of another, even gratuitously, has to be undertaken with care.

This is another illustration that unless you speak with a lawyer, you won’t fully understand your rights. In this case, the motorcycle passenger might be compensated for the injuries from the SUV passenger’s insurance … but that almost certainly wouldn’t have happened if the passenger hadn’t sought good legal help.

New Bankruptcy Law Affects How Much You Can Protect Your Home From Creditors