Debt to Estate, no note, lien, or docs - enforceable?

[rbpfac]

I had a mortgage with my father, who passed away last year. There was no promissory note and no lien, and the company managing the debt went out of business 2 years before he died (LoanKin). The original loan amout was $228k, of which I had paid off $244k over 17 years. I had $138k remaining on the loan, which I was continuing to make payments on, per a gentlemen's agreement. Question: does that debt have any value after his passing? Do I owe any of that balance to his estate? Again, there is no documentation of any kind on the loan - only my own recollection, and an email I wrote to my siblings disclosing the debt. The estate lawyer is aware of the debt and its original terms, but various sibs disagree on its valuation. Help?

 

[quincy]

I had a mortgage with my father, who passed away last year. There was no promissory note and no lien, and the company managing the debt went out of business 2 years before he died (LoanKin). The original loan amout was $228k, of which I had paid off $244k over 17 years. I had $138k remaining on the loan, which I was continuing to make payments on, per a gentlemen's agreement. Question: does that debt have any value after his passing? Do I owe any of that balance to his estate? Again, there is no documentation of any kind on the loan - only my own recollection, and an email I wrote to my siblings disclosing the debt. The estate lawyer is aware of the debt and its original terms, but various sibs disagree on its valuation. Help?

What is the name of your state?

 

[Taxing Matters]

You didn't mention the state, and that matters because probate is state specific. In general the executor of the estate is obligated to round up all the assets of the estate, and your debt to estate would be an estate asset. Once the executor of the estate learns of the debt there are several possibilities for how to deal with it. Since you are also a beneficiary, apparently, one option would be to treat the amount still owed as an advance against your share of the estate, if that would be sufficient to satisfy the debt. The other option if you don't pay is for the estate to sue you for a judgment. It can' t foreclose on your property since your father never had a properly recorded mortgage lien. By far the best thing to do is reach agreement with your siblings on how to treat the loan. That will ultimately save you money and, importantly, if you have a good relationship with them it'll keep family relations from getting strained.

 

[rbpfac]

MA

 

[adjusterjack]

The lawyer has knowledge of your debt. Your siblings have knowledge of your debt. You have admitted that you owed your father the money.

Yes, I think it can be enforced.

The easiest way is to deduct it from your share of the estate.

 

[LdiJ]

I agree that it can be deducted from the estate, but it is a bit more complicated than simply deducting. It would have to be included in the valuation of the estate. Included in the share of each heir (after expenses and including in his share) and then be deducted from his share.

So, for example, if the estate was worth $600,000 including $100,000 of debt that was his and after expenses it was worth $500,000 and there were 4 heirs, then the share of each heir would be $125,000 and then the $100,000 debt would be deducted from his share. I realize that most people here would already understand that but the OP might not, and/or his siblings might not.

I don't understand why there would be a disagreement over what the valuation of the debt was. It might be helpful to know what the rationalization was of the siblings who are disagreeing.

 

[zddoodah]

I had a mortgage with my father, who passed away last year. There was no promissory note and no lien

If there's no note or lien, why do you think this is a mortgage? Also, piecing things together, I think this is the scenario: you own real property and borrowed money from your father, ostensibly with the property as security for the loan, but without actually perfecting any lien and without any documentation whatsoever. Accurate? If so, then this isn't a mortgage. It's just a loan.

does that debt have any value after his passing?

Your father's death has no impact on the validity of the loan.

Do I owe any of that balance to his estate?

Yes. His estate succeeds to his interest in the loan.

The estate lawyer is aware of the debt

What does "The estate lawyer" mean? Whom does this lawyer represent? Who is serving as the executor/administrator of the estate? Did your father have a will? If so, does it make any mention of this loan.

various sibs disagree on its valuation.

OK...this isn't a democracy, though.

Any speculation as to how this could or should be handled in connection wtih the administration of the estate is utterly pointless without knowing a lot more details about the estate, beneficiaries, etc.