I want to leave my property to my children, but I have a reverse mortgage, can I still put my home in a trust?

A reverse mortgage is a loan against your property. Simply, it is repaid by your heirs when you pass on instead of monthly payments now. The interest rate is structured higher than a conventional mortgage. If your property has enough equity, then the added value of the property belongs to your heirs. Your property can still be held in trust, but your heirs need to understand that the reverse mortgage must be paid off upon your passing. This can be accomplished in many ways, including trust provisions that the property be sold or having a life insurance policy that provides enough money to pay off the loan.

I am thinking of pursuing a loan modification, should I pay someone to help me?

The law in California now prohibits attorneys or mortgage agents from collecting any upfront fees for loan modifications. That is good news. You do not have to pay for services until the service is actually rendered. In reality, the law is set up so that everyone can handle a loan modification on their own, if they choose. You will typically need to fill out an application, provide a financial statement, and show that you qualify for the loan modification. Loan modifications can be of many different types ranging from a change in your interest for a fixed period of time or the life of the loan, forgiveness of some of the debt, an extended period in which to repay the loan, as well as many other variations. The objective of the law is to keep homeowners in their home. So, don’t expect the bank to take a $200,000 or $300,000 loss on your property. Expect a more affordable house payment with radically reduced interest rates for the next five years.

What is a Homestead Exemption?

A homestead exemption allows a homeowner to exempt some of the equity in their home from creditors. If you file a Homestead Declaration your creditors will normally not be able to attach all of the equity in your home. In 2010, the exemption amounts will be $75,000 for an individual, $100,000 for a married couple, and $175,000 for persons over 75 years old.

Are there any new tax credits for 2010?

There are two credits of particular interest. New Home Credit. A new home purchase tax credit is available for people who purchase a new construction home – one that has never been lived in. They will be eligible for a tax credit of the lesser of 5% of the purchase price or $10,000.00 against their California income. The credit is taken over three consecutive years for purchases made after March 1, 2009 and before March 1, 2010.

Hiring Tax Credit. Small businesses of less than 20 employees can benefit from a hiring tax credit in the amount of $3,000.00 for each full time employee which was hired after January 1, 2009. The credit is available for a business that has increased the total number of employees employed. This credit is limited, so, it is only available as long as funds are available.

I am planning on having some remodeling work done and I am thinking of saving some money by hiring an unlicensed contractor, what should I know?

First, if you hire an unlicensed contractor for any job over $500.00, and they get hurt working on your property, you will be liable for their injuries. You will be considered the “employer” of the unlicensed workers.

Second, unlicensed contractors are not supposed to be doing work they are required to have a license for and don’t. The law in 2010 gets much tougher with big penalties for the unlicensed worker for jobs over $600.00. If the person doing the work is unlicensed, they may not sue to collect any money owed to them. The law changes in 2010 to also add that the unlicensed person will have to pay back all of the money they received for the job.

The State believes that this will protect homeowners from poor workmanship and scams. This is very bad news for the small mason, carpenter, electrician, or plumber looking to make a few extra dollars if they are unlicensed.

Licensed contractors must post bonds. Always check to see that they are insured and have worker’s compensation insurance.

Margaret A.M. Heine is the principal counsel at Heine Law Group in Fullerton, California. She is licensed in California and Washington, and has authority to practice before the Supreme Court of the United States and the United States Court of International Trade. Her practice includes estate planning, wills, trusts, and probate as well as business, real estate, and civil litigation.

For more information, visit her website at margaretamheine.com.