QUESTION
What happens if I Will my house to my daughter and there is still a mortgage owed on it when I die?
Asked on Aug 24th, 2015 on Estate Planning - Michigan
More details to this question:
I don't have enough life insurance to cover all the loans on my properties. What happens if I bequeath a property to my daughter and there is still a lien against it? Is it better to be left in my estate so she personally won't have to deal with it? Is there any advantage to leaving it to her in my will?
9 ANSWERS
Corporate/Business Attorney serving Beachwood, OH
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Christine Sabio Socrates Attorney at Law
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You can leave the home to your daughter in your will however if there is a mortgage on the property, the bank will require her to either assume the mortgage or pay it off if she would like to keep the property. If you want to make sure that she gets the house, you would need to indicate that in your will. She can decide after your death if she would like to keep the home or she can disclaim it and it will go back into the estate.
Answered on Aug 27th, 2015 at 6:49 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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If you have equity in the house, then giving it to her in your will is the best plan. If there is no equity, the lender will foreclose on the house when you die either way.
Answered on Aug 25th, 2015 at 4:46 AM
Edwin K. Niles
The answer depends on whether there is equity. Is the value more than the mortgage? If so, leave it to daughter. She will have to make the payments or the lender will foreclose. If you are upside down, some people just stop making payments and rent the property out to get some income. It can take 3 months to a year or so for the lender to complete a foreclosure.
Answered on Aug 24th, 2015 at 6:05 PM
The mortgage remains with the house. Your mortgage probably has a due on sale clause so the lender might be able to demand full payment. You have a choice of putting the property into a Trust or preparing a Will.
Answered on Aug 24th, 2015 at 6:03 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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Your daughter would have to continue paying the mortgage payment. I'm not sure what you mean "left in my estate " everything passes to someone. You could leave a will that leaves your house to your daughter, and directs your personal representative to pay the mortgage. Then, other property would have to be sold to pay the mortgage. You really shouldn't be considering one property separate from the others. See a good estate planning lawyer, and map out what you have and what it will cost to settle your estate. Then you arrive at a plan that does what you want with all of your property. Trying to figure out what happens piecemeal means you end up with no plan at all. And I guarantee that no plan is the most expensive and least effective plan.
Answered on Aug 24th, 2015 at 3:03 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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Of course, the bank will want their money; she will have to make arrangements with the bank to take over the loan, or will have to sell the asset to cover the loan as the bank is entitled to call the loan, or they will foreclose.
Answered on Aug 24th, 2015 at 3:03 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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You need to do some estate planning. There is no single answer to your query, and it reveals some options your might wish to consider and plan for. The lien, or mortgage, on the property will normally survive your death.
Answered on Aug 24th, 2015 at 3:02 PM
Commercial Attorney serving Chicago, IL
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Ashcraft & Ashcraft, Ltd.
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If you make a specific bequest of an asset and the asset secures a debt (like a house and mortgage) the debt stays with the property. Your daughter will not personally be responsible for the debt but the debt will remain on the property and if not paid the lender will foreclose on the property. If the asset is in the estate then the asset will be sold and the indebtedness that is secured by the asset will be sold. The remainder, if any, will be distributed as directed in the Will.
Answered on Aug 24th, 2015 at 3:02 PM
Probate Attorney serving New Orleans, LA
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James G. Maguire
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If you leave your home to your daughter, the mortgage will go along with it. Your daughter will have to make the mortgage payments if she wants to stay in the house, or she could sell it and pay off the mortgage and keep the rest of the proceeds.
Answered on Aug 24th, 2015 at 3:02 PM