How is a house handled in an estate?

[yellownikki]

What is the name of your state (only U.S. law)? Georgia
My mom recently passed away. She was not married and my sister and I are her beneficiaries. Her estate contains two cars (one car still has a loan on it), a house (has a mortgage), and a little cash in her checking. The majority of the estate is the house. I am the executor of the will. I am not sure how the house will be handled in the estate. Will it need to be sold to pay the creditors? If so, can I buy it from the estate with the life insurance proceeds? If I buy it, what would I pay for it - the amount of the mortgage or the appraisal value? If I have to sell the house on the market, am I required to make the mortgage payments until the house sells? Will I be reimbursed for the mortgage payments from the sell of the house?

I am also not sure about the cars. Will they need to be sold too? Can we buy them from the estate?

All of the property was in her name only.

This is all way above my head!

 

[anteater]

You are kind of bouncing all over the place here.

You don't say whether the only creditors are the mortgage holder and the car loan or whether there are other creditors.

Keep this general principle in mind: As the executor, you owe a fiduciary duty to treat the beneficiaries and creditors fairly. That means that any transaction you make needs to be "arms length." Transactions need to be at fair market value.

You should begin by obtaining an appraisal of the house's fair market value.

 

[Kiawah]

A quick generic, high level overview.

Your mother had some assets that are worth something at todays fair market value (house 200K, cars 20K (15K + 5K), cash10K, etc), and some liabilities that she owes (mortgage50K, car loan10K, etc), and both some estate and income taxes and expenses (lets say 10K). Her estate (you acting as the PR under the courts guidance), will need to have cash to pay off her liabilities (60K) and her expenses (10K). You will sell assets in the estate to pay. Sell the house, sell the cars, pay off everything that has to be paid.

The estate will then have a remaining value after the liabilities/expenses are paid, which is to be apparently divided (if that is the way the will is written) between two parties. Each gets half. If the estate has converted all of the assets to cash, then it's easy to distribute. There was 230K of assets, less 60K liabilities, less 10K expenses = 160K remaining to distribute.

You get 80K, and your sister gets 80K.


Now, if you would rather have the better of the two cars which was valued at 15K (instead of having sold it for 15K cash), and only take 65K in cash, that can be arranged. You still net 80K worth of stuff (car +cash), your sister still nets 80K (cash).

 

[yellownikki]

Thanks for your help! I know I was throwing a lot of information out there. I just have so many questions. I have made an appointment with a lawyer and an appraiser.

There are lots of other creditors besides the mortgage and car loans. Those are just the two largest. She also has credit cards, student loans, medical bills, etc.

 

[nextwife]

You need to know what is of record against the title to the property and exactly how it is titled.