For most people, the family home represents a vital part of the estate we own. Losing the home is one of the most dreaded events that can happen to us. This is because apart from the monetary value that is attached to the home, we are also emotionally attached to it.
Studies show that more than 67 percent of homes are rented in New York, with most of them giving the option of owning the property later on.
New York, just like other states, has different laws that recognize the role of the home in the well-being of the family and seeks to insulate this asset against claims from creditors. Talk to an asset protection attorney to understand the laws much better.
Let us look at the different ways to protect your family home.
Tenancy by Entirety
Property ownership in New York comes in different shapes and sizes. One of the ownership types that aren’t commonly discussed is the idea of tenancy by the entirety.
This is a unique form of ownership that can only exist between married couples during the marriage. This form of ownership has various characteristics. First, each spouse has the right of survivorship to the home. This means that when a spouse dies, the living spouse takes over full ownership of the property without the need for probate.
Another feature is that one spouse cannot decide to end the rights of the other spouse to his share of the home.
The inability to terminate the survivorship rights of the other spouse secures the home because it reduces the value of the property to creditors.
Keep in mind that this form of ownership isn’t a way to keep the creditors away during repossession. Although they cannot seize it, they have a right to attach it, which prevents you from refinancing or selling the property. Additionally, the tenancy lasts only as long as the marriage, meaning when you divorce, the arrangement collapses and your home is exposed to creditors.
Talk to an asset protection lawyer today to understand what this arrangement can do for you.
Here, the creditor has a right to attach your interest in the joint tenancy, sell your portion to recover his debts and terminate the right of survivorship.
Usually, joint tenancy in New York is advisable for those people that are living together and owning a property yet they are not married. They can use joint tenancy to provide survivorship rights to the other spouse in the event one of the tenants passes away.
Tenancy in Common
In this form of ownership, each tenant owns a percentage of the home without survivorship rights. This means that upon the death of one of the tenants, the portion passes down to the people named in the will and not the co-tenant.
Since the ownership is separate and forms part of his assets, the person’s interest in the property can be attached by creditors.
You can transfer the home into the name of your spouse as long as this process isn’t considered a fraudulent conveyance. The best time to do this is when you just purchase the house.
Any transfer you make after purchasing the house can be deemed as fraudulent conveyance unless you have an apparent reason for doing this. As long as you continue to live in the house, the creditor might see this as a sham transfer to throw them off your back.
There are other disadvantages of retitling the property into your spouse’s name. First, the spouse takes complete control over the property and can sell it as she sees fit. They also have a stronger claim on the property when you divorce.
The Homestead Law
Like many other states, New York has a homestead law that protects a part of the property from being seized by creditors. You can declare a part to be a homestead on one condition – you use it as the primary resident with your family.
Once you declare the part to be a homestead, you protect it against seizure by unsecured creditors. If you own the house as a couple, the law only allows one of you to make a declaration. Declarations don’t add any layer of protection to the home, rather the court will declare the second declaration to be invalid and disregard it.
Once declared, the homestead stands till the person that made the declaration dies or the home is sold.
Protect Your Home Better
Having a home is a beautiful feeling. You get a roof over your head, and your family is secure. This is why you need to protect it at all costs. Work with a qualified asset protection lawyer to protect your home much better.