Berge & Berge, LLP Blog

Monday, November 21, 2016

What happens to your mortgage when you die?

We’ve lost a lot of legends this year, from David Bowie, Natalie Cole to Prince. And while it may seem fairly normal for a Regular Joe to die without a will, it seems really strange to find out that stars like Prince, someone with an all-access pass to consultants and attorneys, would die intestate.

The world was shocked to learn that Prince didn’t have a will and that his remaining family members were fighting over his estate in Paisley Park. What will become of his estate remains to be seen, but it will likely be passed on under the laws of intestacy for Minnesota, where Prince’s estate is located. That is, assuming the estate is not subject to a mortgage.

What happens to your mortgage when you die without a will?

If you die without a will and you own a home that is subject to a mortgage, if family members are not paying attention and not paying the mortgage, the mortgage company could initiate foreclosure proceedings.

If you and your spouse have a mortgage together and you pass on, your spouse would be responsible for taking over payments and would have the right to live in the house, refinance it or sell it.

If, on the other hand, you have a co-signer, rather than a co-borrower, that co-signer would be responsible for taking over payments. They would also bear the responsibility of notifying the lender of your passing.

The danger of dying without a will in place is that often, your family may not know what your assets and liabilities are. If they are unaware that you have a mortgage in place on a home, they will not be able to make payments from the estate to keep the home in place pending probate proceedings.

That’s right, probate. If you die without a will (and even if you die with a will for that matter) you will have to go through some sort of probate proceeding. Depending on the size of the estate, probate can be expensive and take a great deal of time to complete.

If you die without a will and you are the sole borrower on a mortgage and your spouse or other loved one is living in the home, they could end up without a place to live if the lender forecloses. With a little planning, this does not have to happen.

Protect Your Loved Ones With Estate Planning

Making sure your loved ones are taken care of when you die is one of the most loving things you can do for your family. Don’t delay; get the expert advice of an estate-planning attorney today.  The Law Offices of Berge & Berge can offer quality estate planning advice based on over 23 years of experience. Contact us today at 408-389-6980 to see how we can help.

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