Parents don't have to pay dead son's debts

Bankrate.com ^ | Steve McLinden

[rawhide]

Dear Real Estate Adviser, My friends' son committed suicide, leaving a huge financial mess. He owned his own home, which will go to them once it clears probate (he was single, no children). My friends have their own home and cannot afford to maintain a second. They will have to sell it, but the son's house is seriously underwater. What options do they have? -- Tessa

[rawhide]

Dear Tessa, My condolences to your friends and their family for their loss.

Unless your friends served as co-signers, they are likely not responsible for their deceased son's mortgage. Unlike some other countries, there is no "feudal bondage" here that obligates people to honor financial arrangements made by adult members of the immediate family. One exception is the obligation of spouses to their husband's or wife's mortgage debt in some community property states.

Expanded answer at link.

[BobL]

Makes sense to me. But good legal advice there. If the parents do something to show that they’re accepting the house, they may beat.

And the bank would JUST LOVE to trick them into it - so the bank doesn’t lose the $100k on the foreclosure.

[muawiyah]

I was thinking that it was certainly time to strip the property of fixtures and copper ~ unless it's already in probate, so they'd probably have to report that as a robbery (it's a common sort of thing when you leave a house vacant).

We had a family do that here about 25 years back.

A Democrat party fund raising official bought it as a bargain ~

[Hoosier-Daddy]

Ownership and indebtedness is not one in the same thing. The parents can own it and yet not owe on the mortgage. It can go to auction and it will not appear on the parents’ credit.

[PatrioticRose]

If you have a mortgage,you don’t own it. The bank owns it.

[goat granny]

Best advice to any parent, do not co-sign anything for your kids. If you do you put your home and assets on the chopping block....I have refused to co-sign for 2 of my kids....My dad raised no foolish children....

[Sgt_Schultze]

FAFSA

[Vigilanteman]

Somehow, the vultures always seem to know when someone is dead before the family even calls the funeral home. When my older brother passed away, I went to his office to collect what few things of value he had for his surviving daughter. The vultures had already put a seal on it. It would have cost us more to collect it through the probabte/litigation process than it was worth.

Most of it had little or no monetary value, only sentimental. The b*st*rds still wouldn't let us touch anything. I suppose we should have collected it before he died, but when a loved one is fighting for their life in a hospital, you don't always think clearly about that sort of thing.

[BRK]

I am just curious, but what vultures do you mean here? I have never heard of something like this? If these were these creditors, then I guess I understand, although I agree it is terrible for personal sentimental items to get caught up in this. How does one protect themselves/family from these vultures?

[muawiyah]

Used to work in a building where the brass were allowed to provide their own furniture. One of the top guys went to the hospital for a few weeks and when he returned SOMEONE had managed to lock his office furniture up and was preparing to locate some other stuff in there.

He came back and I think he was retired before he ever got his stuff.

There are people who think they are doing good.

[Vigilanteman]

Creditors of a sort, I suppose. He had fallen behind in his rent when he took ill. It is not like the landlord had any immediate prospect to rent to as the vacancy rate in the area was quite high. They were just taking advantage of an opportunity to be an a**hole and extract something.

[BobL]

“Ownership and indebtedness is not one in the same thing. The parents can own it and yet not owe on the mortgage. It can go to auction and it will not appear on the parents’ credit.”

Of course...but sometimes there are traps, and wrong move can destroy you.

[Freedom4US]

The article doesn’t make sense - “seriously underwater” doesn’t sound like he owned anything.

[Mr. K]

shouldn’t his assets be sold to pay his debts?

You dont wipe them off your books because you die, and get to hand over everything to your family

You could get 20 credit cards and max them out withdrawing cash and buy a house, and then die and leave it to your parents? leaving 20 credit companies hold the bag?

[Kellis91789]

Actually, the way bankruptcy laws are written I think you could. It seems like I’ve heard you can file for bankruptcy and they can’t take your primary residence from you. Of course, you might be arrested for fraud if they could prove it was your intent all along.

[jiggyboy]

No, don’t bank on that. Then there would never be any foreclosures, for just one example.

[Kellis91789]

That just means they didn’t file for bankruptcy. A bankruptcy on your record means no new credit for 7 years. You have to be more desperate than just a foreclosure to file. A foreclosure — especially when its common — doesn’t necessarily bar you from other credit, especially by landlords. Renting with a bankruptcy on you record would be tough.