how is your mortgage handled during probate?

how is your mortgage handled during probate

Probate is a legal process where the will of a deceased gets validated by the probate court before its instructions can be carried out. From the moment the will is taken to court and the moment the estate is distributed, there are certain activities that must be carried out by the executor. These activities are what we refer to as the roles of the executor during the probate process. One of which is dealing with debts and mortgages.

The executor is the individual named in a person’s will to take responsibility of managing their estate and disbursing it when the testator passes away. When the testator dies, the executor has to take the will to court for validation because handling someone’s estate has to be legal. Once the court receives the will, probate commences. The executor is charged with overseeing the administration of the estate. What he does during probate proceedings could hasten or delay settlement of estate.

When a loved one dies leaving property, mortgages without transferring it to living trust, probate is required to sort out paying off the deceased person’s final bills and expenses and transferring his property into the names of beneficiaries. Dealing with debts can begin before probate is officially opened.

Dealing with mortgages and debts before probate  

Before probate starts the, estate’s executor can make a list of all the decedent’s liabilities, properties and mortgages. This process would later help fasten probate proceedings. The list should include mortgages, lines of credit, condominium Fees, property taxes, federal and state income taxes among others.

The next thing you do is to divide the debts into two section; which are liabilities or mortgages that will be ongoing during probate — these will be administrative expenses and liabilities that can be paid off in full after the probate estate is opened. Administrative expenses such as mortgages should be kept current till estate closes. Typically, mortgages are to be settled before probate begins.

Dealing with mortgage during probate

Once probate is opened, the estate’s executor also known as personal representative of the estate will be charged with paying administrative expenses and settling the decedent’s final bills. This will include determining which debts or mortgages are valid and to what extent, then assessing which, if any, of the decedent’s assets, should be liquidated or sold to pay ongoing estate expenses and final bills.

Peradventure, the beneficiaries of the assets have continued to pay some or all of the decedent’s bills and mortgages prior to when the probate proceedings was opened, the personal representative would reimburse them accordingly. However, there is an exemption to this. If the decedent named a beneficiary in his Last Will and assign to him a portion of a real estate and that beneficiary intends to assume or refinance the mortgage against the property, he should not necessarily be reimbursed.

Bottom line

According to Garn-St. Germain Depository Institutions Act of 1982 a beneficiary named by a decedent in a Last Will to inherit a house or other real estate may assume the mortgage during or after probate. This federal law forbids lenders from calling loans due or foreclosing when ownership changes hands due to death. The mortgage must typically be current to qualify. As such before a Mortgage can be attended to in probate proceedings, it must be current and not foreclosed.

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