Category: Family

Your Home is Your Castle–But Who is Tending the Drawbridge?

As I write this article, there is almost a foot of snow on the ground. The groundhog has seen his shadow. Cabin Fever is at epidemic levels in the area and we are all counting the days until spring. This is hardly the season to think about home remodeling. However, one good thing about Cabin Fever is that it forces all of us to take a good close look at the cabin. If significant home improvements are in your immediate plans, then this article is intended for you! Perhaps you just plan a spring makeover of a room or two in your home. Perhaps you are at a “transition point” in your life. The children are gone leaving you with the proverbial “empty nest” and the on-going burdens of nest maintenance. Maybe it’s time to sell the place, but before you do, you know that some major work is needed. Whatever your situation or motives, if you are considering significant home improvements, the issues raised in this article should help you avoid becoming a victim of the ever increasing phenomenon known as “Home Improvement Fraud”.

We have all heard that “an ounce of prevention is better than a pound of cure” and that is certainly true in the context of planning and contracting for home improvements. A few simple suggestions, if followed at the early stages of a project, can save considerable heartache (and dollars) in the end. Consider the following points:

1.   Don’t overdo it! If your goal is to realize the most bang for your buck by improving your present home before selling it in the near term, then it is imperative that your planned improvements make economic sense. The addition of a new bath may be very cost-effective whereas other improvements may not yield a short-term return on the investment. It is always a good idea to check with a real estate professional (a sales agent, broker or appraiser) during the planning stages of a project to make sure that your intended improvements will make both dollars and sense.

2.   Do your homework! Once you have identified the scope of your project, then the most important part is the selection of a contractor to do the work. Here is where a little time invested on your part can save a lot of later hand wringing and gnashing of teeth. Get bids from several contractors, but don’t necessarily go with the lowest bidder before checking the references on that company or person – and don’t just accept the references that a contractor freely offers. Few contractors would give the name of a dissatisfied customer. Ask about recent work activity. Where was the company yesterday? Last week? Last month? Get the names of the owners of those projects and call them! Ask if they are satisfied with the job. Are costs estimates followed? Are timelines met?

Does the contractor devote on-going attention to the job? A slow job or one that comes in over estimated costs can be the result of an inexperienced contractor, or – worse yet – one that is over-extended or over-committed with other work. Don’t be afraid of hurting someone’s feelings. Most reputable building contractors in our area are true artisans who are proud of their work. They will gladly share it with you.

3.   Know your rights! This point is critical. If you are generally knowledgeable of what rights the law affords you as a home improvement consumer, you will be in a better position to enforce those rights and avoid becoming a victim of home improvement fraud. Unfortunately, when you discover your rights after they have been violated, then you may find yourself dealing with the proverbial “pound of cure” that can be both expensive and ineffectual in producing positive results for you.

Indiana’s law on the subject of home improvements is generally divided into two distinct areas – (i) civil law and (ii) criminal law. Each area has a potentially different impact on you, the consumer.

As the name implies, the criminal statutes define certain offenses that have been criminalized in the home improvement arena. Those offenses are the typical ones that we normally associate with home improvement fraud. They include gross over-charging (a contract price that is at least four times the fair market value of the work that is done), misrepresentation of either the provisions of the home improvement contract or of the existing or pre-existing conditions of the property involved, false promises of performance or product performance that the home improvement supplier knows are false (such as misrepresenting the heat retention factor of insulation or quoting an unreasonably short “payback” projection for anticipated savings in utility expenses, etc.), or other acts that one would normally think of as fraudulent (such as using a false or fictitious name that is not duly registered to conceal the true identity of the supplier). The offenses range from Class A misdemeanors to Class C felonies, depending upon, among other things, the dollar value of the fraudulent contract. Since seniors have been particularly victimized by such scams, the offenses (and hence the potential punishments) are greater if the victim is sixty years of age or older.

As with any criminal prosecution, the initiating party must be the state of Indiana. Frequently, as part of the “plea bargaining” process, the prosecutor will attempt to obtain financial restitution for the defendant’s victims, but there is no guarantee that any perpetrator of such fraudulent schemes will have the financial resources to make such restitution. My own experience in representing clients in matters such as these is that the prosecutors are sometimes reluctant to initiate actions in the first instance because of the existence of the civil remedies that will be discussed below.

The second area of protection that has been legislatively afforded consumers is in the civil arena. Indiana has adopted a section of its Deceptive Practices Act that applies to home improvement contracts. A few of the act’s major provisions are:

  •  It applies to all consumers who own or lease residential property.
  • It applies to any home improvement contract having a price greater than $150.
  • It requires that the supplier of the home improvement contract provide the consumer with a fully completed written agreement, BEFORE signing by the consumer that includes, among other things, (i)  the name of the improvement supplier, its address and phone number and the names of any agents of the supplier to whom inquiries can be directed, (ii) a detailed description of the work to be done and, if specifications are not included as a part of the contract, a statement that the specifications for the work will be provided to the consumer before commencing the work, (iii) the approximate starting and completion dates for the project, (iv) a statement of any contingencies that would materially change the approximate completion date, (v) and the home improvement contract price. Finally, the contract must be in a form that is easily read and understood by the consumer.

A completely executed copy of the contract must be given to the consumer immediately after the consumer signs the document. Failure of the supplier to comply with those procedural requirements constitutes a violation of the act. Additionally, other parts of the Deceptive Practices Act define violations to include exceeding a cost estimate for the project by more than ten percent without first having obtained the approval of the consumer to the additional cost (and provided that the total cost for materials and services exceeded $750.00).

A person who has been the victim of a deceptive practice may recover the actual damages that were suffered plus reasonable attorneys fees. In this regard it is important to understand that, as the client, you will still be expected to pay your attorney from your own funds. However, any judgment for attorneys fees that the court might enter and that might ultimately be collected would go to reimburse you for those attorneys fees. Finally, if the victim is sixty-five years of age, or older, a court may order the recovery of three times the actual damages suffered in the case of a deceptive practice.

While all of that may sound comforting, the reality is that litigation in the area of home improvement contract law can be quite expensive, time consuming and very frustrating. The recommended “ounce of prevention” will always be preferable to the pounds of legal cure that are afforded under these laws. However, it is important to understand and exercise your rights should, despite your best efforts, you become a victim of home improvement fraud. After all, it is your castle!

The opinions and conclusions expressed in this article are those of the author and are not intended to constitute legal advice as to any particular person or situation. The laws cited in this article contain both substantive and procedural nuances that require the submission of any particular case to competent legal counsel of your choosing.

Premarital Agreements: Essential Protection for Some Marriages

by Walter S. Chidester

Premarital agreements are often used by parties with children by a former marriage whose interests they wish to protect upon the termination of a subsequent marriage. Premarital agreements are being used more frequently in today’s society than in the past. People live longer; people remarry more often; people have more money to protect; and estate planning is more common than it was in the past.

But some people are torn between love and a commitment to a new spouse while wanting to make sure their children or their heirs are protected with what property they bring into the marriage. Having a properly executed premarital agreement may be just as essential to a strong marriage as your love for your new husband or wife. A basic understanding of premarital agreements, coupled with simple and basic planning, can avoid potential problems to either you or your heirs.

What is a Premarital Agreement?   A premarital agreement is a legal contract by which a husband and wife, prior to their marriage, agree as to their property ownership both during their marriage and upon the marriage’s termination by death, dissolution or legal separation.

A premarital agreement (what we used to commonly know as a prenuptial agreement) is an agreement between prospective spouses that is executed in contemplation of marriage and becomes effective upon marriage. It must be in writing and must be signed by both parties.

In a premarital agreement, a wife and husband may contract with each other concerning the rights and obligations of each in any property of either the wife or husband or both. A wife and husband may contract for their rights and obligations whenever the property is acquired or wherever the property is located.

Property in a premarital agreement, by Indiana law, means “an interest, present or future, legal or equitable, vested or contingent, in real and personal property, including income and earnings.” By way of example, this includes real estate (including your residence and rental properties), savings accounts, money market accounts, certificates of deposits, mutual funds, stocks, and bonds.

In a premarital agreement, a husband and wife have flexibility in choosing ways of handling their assets. A husband and wife can agree to keep separate during the marriage all or some of the assets each owned prior to the marriage. They can also agree to keep separate assets acquired prior to their marriage but pool together assets and income accumulated during their marriage. A husband and wife can pool together some, but not all, of their assets each owned prior to the marriage. A husband and wife can agree on whatever method of handling assets meets their joint approval.

Why do you need a premarital agreement?   Quite simply, to protect your property for your children or your heirs. Marriages, especially second marriages, may have problems when they end by death or divorce. If you have properly planned for, and contracted for, the handling of your property, your heirs will get what you have planned for them to receive.

Failure to properly plan ahead, however, may invite disaster. When a person with children remarries a spouse who also has children, sharing emotions is sometimes easier than sharing money with a new spouse. If a husband and wife have not discussed the handling of their property prior to their marriage, this may later result in a conflict between the spouses or between a surviving spouse and the deceased spouse’s children. Many people who remarry want to make a commitment to their second husband or wife, but they also want to make sure that their children are protected as well.

Basic and simple planning can avoid a lot of headaches during your lifetime. It can also avoid headaches and heartaches for your children after you are gone. The need to plan, and to consult, applies to nearly all of us, not just the well to do.

Who Needs a Premarital Agreement?   While any individual may wish to consult with an attorney prior to marriage, anyone with children who marries or remarries should consult with an attorney experienced in estate planning and family law in order to protect assets for his or her heirs, usually the person’s children.

The amount of money you have does not matter. What is important is protecting your assets for your children or for other beneficiaries to whom you wish to leave your estate.

When should you have a premarital agreement?   A premarital agreement must be drawn up and signed prior to marriage. It is best to consult with an attorney well in advance of any wedding date so that you can discuss, in an objective manner, precisely how you wish to handle your assets in your marriage. It is best to plan with your head, not your heart. Rushing to an attorney’s office a few days before the wedding is an emotional process, not an objective one.

A premarital agreement is drawn up to preserve the status quo as to property interests existing before marriage. What happens if you sign a premarital agreement after you marry instead of before? Post-marital agreements do not protect your assets in the same manner that a premarital agreement does. An agreement signed after you marry may not prevent your spouse from claiming a share of your estate if you die first or from claiming part of your property in the case of a divorce. By way of example, say you owned real estate in your name only with a value of $100,000 and you failed to execute a premarital agreement before your marriage. Even though you and your spouse signed an agreement after you married for handling your property, at your death your spouse could be entitled to a life estate in one-third of the value of the real estate. A premarital agreement would have the entire $100,000 go to your children.

Where Should the Premarital Agreement be signed? Premarital agreements should be signed in the office of a lawyer experienced with premarital agreements and who is qualified to advise and discuss with you estate planning issues and family law issues for your premarital agreement. Each spouse should consult with his or her own lawyer. A lawyer cannot advise both a husband and a wife on the planning of a premarital agreement.

Can a Premarital Agreement be amended or revoked?   After marriage, a premarital agreement may be revoked or amended only by a written agreement signed by both the husband and the wife.

Will a Court Enforce All Premarital Agreements?   A Court will not enforce a premarital contract if a person against whom enforcement is sought proves that the party did not execute the agreement voluntarily or the agreement was unconscionable when the agreement was executed.

A Court may also require a party to provide spousal maintenance to the extent necessary to avoid extreme hardship if a premarital agreement modifies or eliminates spousal maintenance and that modification or elimination causes extreme hardship not reasonably foreseen when the agreement was signed.

What about Medicaid?   Some people are under the mistaken impression that a premarital agreement will protect a spouse’s property and assets from Medicaid in the event the other spouse is forced to go on Medicaid. Regardless of whether or not a husband and wife have a premarital agreement, Medicaid will count the resources, property and assets of both husband and wife when making a financial determination for Medicaid eligibility for one spouse. For a spouse who needs Medicaid, a premarital agreement cannot and does not protect a spouse not needing Medicaid from having Medicaid count the property and assets of both spouses.

What if there is no Premarital Agreement?   If you do not have a premarital agreement and your marriage ends in a divorce, then your spouse may be entitled to some of the property or assets you brought into the marriage, as well as an increase in the value of the property or assets you brought into a marriage. By way of example, if you own your home in your name only prior to the marriage, and it is worth $80,000 when you married, and your marriage ends in divorce five years later, then your spouse may be entitled to one-half of the increase in the value of your house during the time of the marriage. If your home increases in value to $120,000 at the time of the divorce, then your spouse may get $20,000.00, or one-half of the $40,000 increase. A properly executed premarital agreement could prevent such an occurrence.

Without a premarital agreement, if you die and have children from a prior marriage, your second spouse could receive one-third of your personal property and a life estate in one-third of your real estate, as well as a $15,000.00 surviving spouse allowance. Again, a properly executed premarital agreement could prevent such an occurrence.

Summary

1.      Plan your premarital agreement
2.      Meet with an attorney experienced in premarital agreements
3.      Sign a premarital agreement before you marry