Before a deceased person’s instructions can be carried out, the probate court must first approve the will as part of a legal process called probate. There are specific tasks that the executor must complete from the time the will is challenged in court until the estate is distributed. These actions are what we mean when we talk about the executor’s responsibilities during the probate procedure. One of which is dealing with debts and mortgages.
The person designated in a will as the executor will be in charge of administering that person’s estate and making distributions after their death. Because managing someone’s estate must be legal, the executor must submit the will to the court for validation after the testator passes away. Once the court receives the will, probate commences. The executor is responsible for managing the estate’s administration. His actions during the probate process could speed up or slow down the estate settlement.
Probate is necessary to handle paying off the decedent’s final bills and expenses and transferring his property into the names of beneficiaries when a loved one passes away leaving property, mortgages, and other debts unpaid. Dealing with debts can begin before probate is officially opened.
Executors are responsible for paying the mortgage and other debts from the estate’s assets. Executors aren’t personally responsible, however, for paying the deceased’s mortgage or other debt obligations.
Dealing with mortgages and debts before probate
The executor of the estate may compile a list of all the debts, assets, and mortgages of the deceased prior to opening probate. This process would later help fasten probate proceedings. The list should contain, among other things, mortgages, credit lines, condominium fees, property taxes, and federal and state income taxes.
The next step is to separate the debts into two categories: obligations or mortgages that will continue to be paid while the probate process is ongoing (administrative costs) and obligations that can be fully repaid once the probate estate is opened. Until the estate closes, administrative costs like mortgages should be kept current. Typically, mortgages are to be settled before probate begins.
Dealing with mortgage during probate
The executor of the estate, also known as the personal representative of the estate, will be in charge of paying administrative costs and settling the decedent’s final debts once probate is opened. In order to do this, it will be necessary to first ascertain which debts or mortgages are legitimate and to what extent, as well as to determine which, if any, of the decedent’s assets should be liquidated or sold in order to cover ongoing estate costs and remaining debts.
In the unlikely event that the beneficiaries of the assets had already started paying the decedent’s debts and mortgages when the probate process was initiated, the personal representative would reimburse them in full. However, there is an exemption to this. The beneficiary of a real estate assignment made by the decedent in his Last Will and Testament who plans to take over or refinance the mortgage on the property should not necessarily be compensated.
Bottom line
According to Garn-St. A beneficiary designated by a decedent in a Last Will and Testament to inherit a home or other real estate may take on the mortgage during or after probate under the Germain Depository Institutions Act of 1982. When ownership changes hands as a result of a death, this federal law prohibits lenders from calling loans due or foreclosing. The mortgage must typically be current to qualify. As a result, a mortgage must be current and not in foreclosure before it can be handled in probate proceedings.
FAQ
How does a mortgage get paid after someone dies?
The surviving family who inherited the property typically makes mortgage payments to stay current while they arrange to sell the house. The mortgage servicer will start the process of foreclosing on the house if no one takes over the mortgage after you pass away or continues to make payments.
Can a beneficiary take over a mortgage?
Mortgage: Under federal law, lenders must allow heirs to a property to assume a mortgage. But an heir is not required to continue paying the mortgage. They have three options: settle the debt, refinance, or sell the house.
When a homeowner dies before the mortgage is paid?
If a homeowner passes away before paying off their mortgage, the lender is still entitled to its money. Typically, the mortgage is paid off by the estate, a beneficiary inherits the home and does so, or the house is sold to cover the debt.
Who pays the mortgage if the owner dies?
The most important thing to understand about mortgages obtained prior to your death is that no one will be required to repay the loan unless they specifically agreed to do so. However, your beneficiaries and heirs will have the choice to continue making mortgage payments and keep the house.