Depends on children's age, weather trust was in place, what was still owed on the house if trust was in place, if there was a an executor for those trusts if the kids were minors. And so on. When a parent passes, children or bank get the house?
Houses are parts of estates and unless there is a trust involved that passes title of the house from the parent to the heirs, there are taxes and probate fees and alot of other costs involved which is why trusts are so important. A will only says who the deceased wants to have the property but wills can (and often are) contested which means time goes by and the attorney's clock continues to tick, tick, tick. If it's not too late, set up a trust. The house will only go to the bank if it's foreclosed upon. Don't let that happen. If there's any equity in the house, keep up on the payments until the probate time/costs are over with. Consult an attorney. This is a legal matter.
The loan has to be paid off as part of the probate process before the title can pass to the heirs. Often, that means they will have to get a new loan in their name. The alternative is for the estate to sell the house, pay off the loan and the heirs receive any remaining equity from the sale.
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