Advice Please!!!

What is the name of your state (only U.S. law)? Kentucky

My father in law recently passed away. He did not have a will, he did own a home which is mortgaged to the max. Other than that no other assets (if you want to classify that as an asset). He did have a couple credit cards with balances on them. He left my wife and her sister an insurance policy. First question do the creditors have any right to the insurance policy? My next question would be what is the responsibility of my wife and her sister to the debt and mortgage? The lawyer they hired said that if they allow the home to go into foreclosure then it would effect each one of there credit. I have never heard of this and would greatly appreciate any advice. Also then would the bank have any right to the insurance policy?

Thank you,

Jon

Advice Please

As I understand it, his debts will only affect those persons that held those debts jointly with him. If his children are not "co-debtors" and the creditors don't have their SS# in association with any specific debt, it does not affect them. I am not sure about how the real property will affect them however, if the property was not willed to anyone and again, the children did not incur this debt with him, it seems unlikely that it should affect them. The insurance proceeds can be used by the beneficiaries to pay whatever they deem necessary however, the creditors do not have a "right" to it.

Good luck.

The answer on the insurance is if you are the beneficiaries on the policy or if the estate gets the money and you inherit it. In the second, no, your credit is not affected if you disclaim the house and it goes to foreclosure. If you take the house subject to the mortgage and then fail to pay, then yes.

Why wait for foreclosure? The RESPONSIBLE thing would be to contact the lenders loss mitigation department, advise of the borrower's death, that the estate is insolvent and offer to assist in getting it sold on a short sale or offer to have the PR give it to them Deed in Lieu.

Who should take such responsibility for free?

That is a lot of work for someone. First there would need to be an opening of probate and an accepting of responsibility of winding up the estate. There are costs involved. Not only would your theory of responsibility take money, it would take a lot of time and effort. This is an intestate succession on which no one is going to get anything for their effort because there is nothing there.

I think I'm a fairly responsible guy, but I don't know if I'd take months of effort, expense and hassle because someone I loved died and the bank wants their money.

tranquility said:

Who should take such responsibility for free?

That is a lot of work for someone. First there would need to be an opening of probate and an accepting of responsibility of winding up the estate. There are costs involved. Not only would your theory of responsibility take money, it would take a lot of time and effort. This is an intestate succession on which no one is going to get anything for their effort because there is nothing there.

I think I'm a fairly responsible guy, but I don't know if I'd take months of effort, expense and hassle because someone I loved died and the bank wants their money.

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Months of work? I recently handled three such insolvent estate transfers. A family member simply applied for establishment as PR (we even agreed to pay the filing fee for one REALLY insolvent estate), they filed an affidavit of no assets, we obtained a valuation to justify the worth and they did either quit claims or short sales. We did most of the work. WE even paid the utilities to prevent freeze ups or flooding due to a sump pump not running in the basement. There were no estate taxes to pay because there was no inheritance. And the whole shebang was finished within a month.

At minimum, the estate should contact the foreclosure department, advise them of the death, and discuss options with the lender. Instead of walking away and risking freeze ups and foundation damage due to abandonment.

Maybe I missed it, but did anyone answer the questions:

"He left my wife and her sister an insurance policy. First question do the creditors have any right to the insurance policy?"

At minimum, the estate should contact the foreclosure department, advise them of the death, and discuss options with the lender. Instead of walking away and risking freeze ups and foundation damage due to abandonment.

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Who or what is the "estate"? Someone must make the contact, who should it be?

For the bank to listen, there needs to be some legal representative. There is none until probate is opened. Once someone opens it, they are responsible for winding it up.

Months of work? I recently handled three such insolvent estate transfers.

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Super, I'm glad *your* job was easier. How about theirs? What did they have to do to wind things up so you could just sign a couple of forms and be done with it? Why did they have the responsibility, legal or ethical to do this?

And the whole shebang was finished within a month.

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No way. Maybe the part you had to deal with, but the probate was not finished in a month. While I'm sure many in the banking industry would love for people with no responsibility to deal with things step up and make it easier on them, I don't see a great need for the OP in this instance to go through the INCREDIBLE HASSLE OF PROBATE for your benefit.

OP, let it go. Enjoy your insurance money, mourn your father-in-law, and ignore any plaintive crys from the banking industry.