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Disbursing Funds as an Escrow Agent
Delivery of funds from an escrow account is governed by the rules of professional conduct as defined by the Massachusetts Supreme Judicial Court. Your lawyer’s escrow account can contain documents, money, deeds, stock, settlements, and insurance. When your attorney administers an estate, settles a traffic accident, or closes the sale of residential or commercial real estate, he or she holds money in an escrow, or trust, account. Disbursing funds from the escrow account is a service that your attorney performs precisely according to the rules of your contract, upon notification of the parties, with a full detailed accounting without delay.
Using Escrow Accounts to Defer Capital Gains
Historically, tax-deferred individual retirement accounts meant paying no taxes on your income saved for retirement. Similarly, your deferred capital gains tax on a portion of your one-time sale of your family home when you put the proceeds into a retirement account. You can choose the year that you receive a capital gain if your attorney holds your settlement, the proceeds of your sale, or your deed in escrow.
The Benefits of a Life Estate
A life estate refers to a property that belongs entirely to a beneficiary upon the death of the loved one. The benefits of the life estate are not only that your elder or permanently disabled loved one has the right to reside on the property for the rest of his or her life. A strong benefit of a life estate is that the property no longer belongs to an elder who may incur steep medical bills. If your senior loved one incurs hospital and nursing home bills prior to death and you already own the property, medical centers, doctors, and nursing services can not place a lien on the elder’s property.
If the deceased has three children and the will specifies that the house should be sold and the wealth distributed equally to each of the three children, your attorney who has held the deed to the house in escrow can sell the property and deliver equal thirds of the capital gain to each of the beneficiaries. Our attorney managing your elder’s funds held in trust pays all your loved one’s monthly bills and extracts the agreed upon fee for his services. In the case of a conservatorship where a third-party is responsible for making decisions regarding your loved one’s care, you oversee the decisions of the conservator and the distribution of funds from the trust account.
Escrow Accounts Are Separate Within an Account
Your lawyer’s escrow account is separate and distinct from his business operating account. The funds in the account are separated by client, business, or sale. Legal fees collected upon the settlement of a personal injury accident are paid to the attorney when the final medical bills are paid out of the same escrow account and the accident victim is compensated for his losses.
Real Estate Transactions
Real estate sales usually require the buyer to deposit earnest money or the full downpayment on a house or commercial property to secure his equitable interest in the contract. If the seller declines the sale due to a better offer or decides at the last minute not to sell, the earnest money is returned to the potential buyer out of the escrow account. If the buyer defaults on the contract or inconveniences the seller by not qualifying for financing or failing to meet the terms of the sales contract, the contract usually has a clause allowing the seller to keep the earnest money.
Safekeeping of Funds and Assets
Your funds and assets are held in a Massachusetts fiduciary account separated by client. Deposits are meticulously recorded in the attorney’s check register with the dates and times of all deposits and debits by line item. Deposits must be into an interest bearing account, the attorney’s IOLTA account. The interest on the lawyers trust account The lawyer’s trust account may be a master account with sub accounts or a large account with clients line items.
Goldberg and Oriel
Call our Boston escrow agents with 50 years of experience managing clients’ real estate endeavors, administering trusts and estates, and processing commercial and residential real estate transactions in our conveniently located Boston area law office today for staunch financial advice and solutions to even your most complex financial legal problems. Our attorney will personally answer all your probate, estate, and real estate-related questions.