DEAR BENNY: When my dad and stepmother got married they moved to Florida and bought a home together. Because there are children on both sides, they had a prenuptial agreement drawn up that states the home would be divided equally between the children when they both were gone. Sadly, my dad passed away recently, and we were just told that Florida law states that the deed to the house automatically goes into the surviving spouse’s name. We were told that my stepmother owns the house now and we are out of luck.

She and her family do not intend to honor the prenuptial agreement and, according to the lawyer handling the estate, we have no recourse. My question is would the prenuptial agreement take over when my stepmother passes? What happens if she sells the house, buys another and puts the new house in her family’s name? –Mike

DEAR MIKE: I don’t know Florida law, and suggest you talk with another attorney to get a second opinion. I am assuming that your dad and stepmother took title to the property either as tenants by the entirety — which is reserved for married couples — or as joint tenants with rights of survivorship . In either case, on your dad’s death, the house automatically (by operation of law) vested title to the survivor.

That’s the general law in most states, not only in Florida. However, I am concerned that the stepmother may be trying to avoid the obligations of the prenuptial agreement. That’s a contract that should be binding on her, and perhaps your second attorney will be able to give you a better opinion.

To answer your question, however, have you read the prenuptial agreement? It may have provided that on your dad’s death, she could live in the house for her lifetime, after which the property would be divided up between the two families.

If that’s not the case, then she owns the property and the prenup may be meaningless. Your lawyer should be able to provide you with the law in your state.

DEAR BENNY: Please explain the process of an appraiser for estate property. Also, I need to know the effect the appraisal has on income tax or estate tax. I have been unable to find anything in detail on this subject except the fact that you need to get appraisals. –Joe

DEAR JOE: State probate laws vary, but generally real property needs to be appraised as of the date of death for probate purposes. In the District of Columbia, where I practice law, it is sufficient to use the government’s real estate tax-assessed value to report the property value in the petition for probate.

For federal estate tax purposes, an appraisal is required to be filed with the estate tax return. For date of death in 2009, a federal estate tax return is required only if the gross estate is greater that $3.5 million. Last year the threshold for filing a return was $2 million. If a return is required (or if the IRS could argue that it was required), an appraisal as of the date of death should be prepared. An "alternate valuation date" using the date that is six months after the date of death can be used if the appraised value on that date is lower than the date-of-death value.

Federal income tax is imposed on the gain on the sale of the decedent’s property. The gain is determined by taking the difference between the date-of-death value (or alternate valuation date, if that date is used) and the sales price of the property. The taxpayer cannot use one valuation for estate tax and another for income tax purposes, so it is important to consider both estate and income tax consequences when choosing the valuation date.

State estate tax and income tax would also need to be considered, but the laws vary state to state as to what, if any, amount is exempt from tax. In the District of Columbia, for example, the decedent’s assets up to $1 million are exempt from estate tax. The federal valuation and alternate valuation rules are followed.

I hope this general statement is helpful, but you really should consult your own tax and financial advisors regarding the law in the state where the decedent died. …CONTINUED

DEAR BENNY: Is it very difficult to get rid of a homeowners association? I don’t mean condos or mobile home parks, just single-family homes. –Maryjane

DEAR MARYJANE: Whether the community association is a condominium, a cooperative, or a homeowners association, it will have a set of legal documents. In a condominium, they are usually called the declaration and bylaws. In a cooperative, it is bylaws and a proprietary lease (or occupancy agreement). And in a homeowners association, they are called covenants, conditions and restrictions — commonly called "CC&Rs."

The legal documents — and your applicable state law — will tell you the percentage vote required to terminate the association. For example, in the District of Columbia where I practice law, it takes a 4/5 vote of the entire membership to terminate a condominium.

You must consult a knowledgeable attorney if you are interested in terminating. You have to give serious thought as to the consequences. For example, if there are amenities in your association, such as parks, tot lots or swimming pools, who will own and be responsible for them once the association is no longer in control?

DEAR BENNY: My son is pressuring me to help him buy a small waterfront condo in Miami’s South Beach. I have tried to discourage him, but he insists the property has fallen from $300,000 to $100,000 and is a steal. Please send me your opinion and comments as to this being a great investment at this time. I need some ammunition to talk him out of this crazy idea. –James

DEAR JAMES: You raise a difficult question, which unfortunately only you can answer. I don’t know whether that condo in South Beach is worth $100,000, $300,000 or just $1. I know that property values have plummeted in the past several months.

Does your son want to live in that condominium? If so, that would make a difference in your thought process. Clearly, I would not support him with only an investment opportunity.

Have you and your son reviewed the status of the condominium? Does it have any reserve accounts? What is the level of delinquencies? What kind of repairs are needed — today and next year? What are other units in the complex selling for? These are all the questions that you and your son should explore before either of you make a decision.

DEAR BENNY: I recently bought a new house, and obtained a mortgage loan in the amount of $520,000 at 6.375 percent. Because rates have come down a lot, I tried to refinance with another lender. First, the loan consultant told me there would be no loan points or impounds. However, when they sent me the papers, the loan had one point and impounds. The loan consultant said he would fix it.

Then, they refused my loan because they could not verify I lived there. I had to write an explanation that I was having major construction being done and would move in when it was finished. They still refused my loan. What would you do? Who can I complain to? –Betty

DEAR BETTY: Do you know why you have been rejected for that loan? Your lender is required by federal law to send you a written explanation as to why you were denied. Because of the economy, lenders are more careful — more conservative — then they were just a few years ago.

The potential lender may have received a low appraisal. Your credit rating may have been lowered because you applied for a loan shortly after you obtained your current mortgage.

There are a host of reasons — real or imagined — on which you were denied, but you are entitled to learn the real reasons.

If you cannot get this information from the lender, I suggest that you shop around for a different lender. Interest rates are low and you don’t want to lose out should rates start to increase (and I am not predicting this will happen in the near future). Additionally, you should send a complaint to your state’s attorney general’s office, as well as to the Federal Trade Commission and the Federal Reserve Board. While these agencies may not act promptly or at all, if you send copies of your complaints to the lender, that may get their attention.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to


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