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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 :laugh: "estate" :laugh: and decide to just walk away from it?

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

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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.
 

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The CC company can go after the estate, correct?

Right now, we believe she is :jug: 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.
 

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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.
 

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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.
 

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

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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.
 

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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
 

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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
 

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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.
 

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Edit: Wow that was a UK link...
 

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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.
 

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

Not in NYS. Of course that depends on what you call serious. Parents can give up to x$ without having to pay gift tax. I and my siblings don't have to pay any tax until we sell part or all of the property, which we did when we split the house off the rest of the property...and will have to again, if and when we sell any acreage.

I don't know what the limit is...only know we are not over it.

I believe the transfer had to be done 5 years before either of my parents died.

Lee
 

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

Not in NYS. Of course that depends on what you call serious. Parents can give up to x$ without having to pay gift tax. I and my siblings don't have to pay any tax until we sell part or all of the property, which we did when we split the house off the rest of the property...and will have to again, if and when we sell any acreage.
Yes, it varies by state.

Thus dangerous, not necessarily bad. :)
 

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I knew I'd heard about this recently from Dave.

And it came up again on 10/21 (yeah I'm a month behind...)

"Gifting" a house to an heir CAN be done without tax implications :
"If he were to move the property to their name he has to do that under what's called the Unified Estate Tax Credit. You can move up to 1 million to your heirs before your death without paying gift tax under the Unified Estate Tax Credit. "

Otherwise there's a potential for a 55% penalty under the gift tax - payable by the giver

It must be filed properly - a tax planner/ tax attorney should be used.
 

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Land has to be out of the person name for 7 years or they can go after it if the person has to go into a nursing home. Money has to be out of their name 5 years. These both depend on the state though as far as the # of years.

A tax free gift can be given each year...$13,000.00 now...that is tax free.

My sil's dad died after only a few weeks ...5 or 6 weeks. He had signed some sort of paper when he went in. The government stepped in and took his home and a 7 more lots that he had. The kids didn't even have enough money to bury him. None of the kids have money so its been tough on them. The land is worth far more than what his care would have been. I just don't think that is right. They should have at least allowed them the money to bury their father out of his estate before taking it all.
 

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Land has to be out of the person name for 7 years or they can go after it if the person has to go into a nursing home. Money has to be out of their name 5 years. These both depend on the state though as far as the # of years.

A tax free gift can be given each year...$13,000.00 now...that is tax free.

My sil's dad died after only a few weeks ...5 or 6 weeks. He had signed some sort of paper when he went in. The government stepped in and took his home and a 7 more lots that he had. The kids didn't even have enough money to bury him. None of the kids have money so its been tough on them. The land is worth far more than what his care would have been. I just don't think that is right. They should have at least allowed them the money to bury their father out of his estate before taking it all.
The funeral home will submit a claim to the administrator of the estate to pay for any funeral expenses.We rented extra farmland at one point and had paid for fertilizer and to prepare soil. The owner passed, his heirs inherited the property and did not want to rent it anymore. They did not want to reimburse us for our loss, so we just bypassed them and filed a claim with the administrator. Sweet and simple and we got our money.
 
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