In seeking bankruptcy protection for Massachusetts clients, personal bankruptcy lawyers often use the local Massachusetts bankruptcy exemptions to enable clients to keep their homes. That exemption is $500,000 of equity. However, many folks put their homes in trusts.
We have cases in which homes are put in and out of trusts in order to satisfy requirements of mortgage lenders. How does this impact those filing personal bankruptcy in Massachusetts? In a recent Federal Bankruptcy Court decision by Judge Joan Feeney, the Court held that notwithstanding the client’s holding her home in a trust, the intent of the law was to provide homestead protection to someone with “rightful possession” under the trust document, rather than title.
When we file personal bankruptcies for clients, we advise that they hold property they wish to claim as exempt under the homestead law in their own name. However, Judge Feeney has made it easier for some to claim the exemption when a trust is involved.