leaving your house to your children + debts?

**Russ** · 11-18-2010, 07:43 AM

Wife and I were talking about her sister and her debts and we were wondering...

If she dies and leaves the house to the kids, will they be responsible for all the debt she has incurred against the house?.. back taxes, liens, mortgage, HELOC... etc etc etc

Or can they review the net worth of the

"estate"

and decide to just walk away from it?

And can her CC company go after the estate AFTER they have taken over the house?

**Greebo** · 11-18-2010, 09:03 AM

The estate will be liable for the debts. If the debts outweigh the assets - cash, real estate, etc - the "heirs" will never see a penny of it. They will have no legal right to "take over" the house - because the creditors have first dibs.

So if they take over the house without properly settling the estate, then yes, they could lose it - because it would never really have been theirs.

But that's it - the creditors cannot go after them personally for the parent's debts. The creditors can ONLY take everything the parents had - not anything the parents didn't have.

**Russ** · 11-18-2010, 09:15 AM

The CC company can go after the estate, correct?

Right now, we believe she is

her debts and paying whenever she gets a threatening letter. < That does not stop her from spending though.

That and she is waiting on her inheritance from when her folks die to get her out of the hole.

**Greebo** · 11-18-2010, 09:21 AM

Originally Posted by Russ

The CC company can go after the estate, correct?

Absolutely.

The inheritors are only legally entitled to whatever might be left AFTER the debts are settled.

There are some things that can be done to help do *some* sheltering, but not much.

**imagine** · 11-18-2010, 09:45 AM

Can they go after life insurance as well?

When my Hubby's father died the Pharamacy was owed $$ as his medicine was a million dollars. The lawyer said the children (youngest as 13) at the time might not get any money or the house as the pharmacy had first dibs. I was thinking that the pharmacy could have go life insurance money payout as well.

The pharmacy decided not to pressure the estate for the amount owed and the children got the house and life insurance money.

**Greebo** · 11-18-2010, 09:48 AM

Hmm. I don't *think* so - life insurance isn't paid to the estate, it's paid to the beneficiary.

**imagine** · 11-18-2010, 09:53 AM

Originally Posted by Greebo

Hmm. I don't *think* so - life insurance isn't paid to the estate, it's paid to the beneficiary.

edited

to say I did a bit of research.

Some estates are the benificenary and would be collectible

if the estate is not the beneficiary the the law on if it is collectible varies by state

**Greebo** · 11-18-2010, 10:17 AM

Answers.com - If someone dies with 10K in credit card debt and no assets but has life insurance does the credit company get the insurance or does it go to the beneficiary

You beat me to it.

It varies by state.

**annymoll** · 11-18-2010, 11:41 AM

We have a business. Many times we have received a judgement(lien ) on the estate for debts owed.Let's hope that sis gets her act together. It is a sad legacy to leave behind, this type of financial neglect and mismanagement.I would be so ashamed.

**Russ** · 11-18-2010, 11:56 AM

Oh, she won't. She is 52 y/o and still "borrows" a couple hundred until payday from her Mommy.

**fernykins** · 11-18-2010, 12:22 PM

The lawyer I had to hire om my sons death told me. That most debts under 20000 they don't go after the estate. But housing is different.
Fern

**lparker** · 11-18-2010, 01:44 PM

back taxes, liens, mortgage, HELOC --

These are all liens against the property. Best thing to do is get everything caught up and have her give the property to you kids. That's what my folks did. Then if Medicare, hospitals, etc, get some bills run up against them, you don't lose the property. There probably is a 2-5 year wait on the transfer being free from debt collection.

Lee

**imagine** · 11-18-2010, 01:57 PM

talked with Hubby on this topic during our lunch date.

The banker/accountant in him had much to say about the topic. Basically it all boils down to very confusing laws and lots of could, might, able to, but don't always sort of thing, that is why lawyers are hired to handle estates at death.

**Greebo** · 11-18-2010, 02:09 PM

Edit: Wow that was a UK link...

**Greebo** · 11-18-2010, 02:13 PM

Originally Posted by lparker

back taxes, liens, mortgage, HELOC --

These are all liens against the property. Best thing to do is get everything caught up and have her give the property to you kids.

Dangerous advice.

TurboTax® - The Gift Tax

The tax implications for giver and receiver *can* be serious.