Who's debt is it?

[sunnybuck]

NC
My sibling and I inherited our parent's estate. One sibling inherited a large tract of land with buildings and another inherited the family home. The land piece is worth more than double the home and is debt free, but the family home has an equity line on it. Who's debt is this? Is it the inheritor of the home responsible or is the estate responsible? The estate has other assets as well. All other assets are jointly owned.

 

[Zigner]

NC
My sibling and I inherited our parent's estate. One sibling inherited a large tract of land with buildings and another inherited the family home. The land piece is worth more than double the home and is debt free, but the family home has an equity line on it. Who's debt is this? Is it the inheritor of the home responsible or is the estate responsible? The estate has other assets as well. All other assets are jointly owned.

All debts must be paid from the estate before property is distributed, unless the recipient of the property is willing to take over the existing obligation(s). (That's a very general statement)

 

[HRZ]

I agree and often the will directs executor to pay all the debts up front .

 

[Zigner]

I agree and often the will directs executor to pay all the debts up front .

Actually, the law does that

 

[HRZ]

The jointly owned assets may not be in the probate pot and they pass by title ? Becareful.

BTW where does executor get cash to pay the equity debt and other bills ?

 

[PayrollHRGuy]

From the estate? Did you really mean to ask that question?

 

[HRZ]

Yep, because if the estate is illiquid the executor is going to need to sell at least one property to pay the bills ...and that may be political fun?

 

[Zigner]

Yep, because if the estate is illiquid the executor is going to need to sell at least one property to pay the bills ...and that may be political fun?

If that's the case, then the executor/administrator is still getting the funds from the estate. I understand what you are trying to say, but you really needed to be more clear about the point you were making.

 

[Taxing Matters]

NC
My sibling and I inherited our parent's estate. One sibling inherited a large tract of land with buildings and another inherited the family home. The land piece is worth more than double the home and is debt free, but the family home has an equity line on it. Who's debt is this? Is it the inheritor of the home responsible or is the estate responsible? The estate has other assets as well. All other assets are jointly owned.

The debt is owed by the estate of the decedent. However, you seem to be asking if the mortgage debt is chargeable against only the share of the estate that the beneficiary of the property with the mortgage on it gets or chargeable to all the beneficiaries. In other words, lets say Amy is getting the house that has the mortgage on it. The estate is responsible to pay that mortgage. The issue, though, is if the mortgage is paid by the estate, how is that charged to the shares each beneficiary gets from the estate? Is that charged entirely against Amy's share, does it reduce the share of the estate estate each beneficiary gets equally? Or something else? For the answer to that, you first have to look at the will. A well drafted will by an attorney generally has provisions that set out how debts like this are charged to the shares of each beneficiary; this is one reason why going to a lawyer to get a will drafted is better than using some form off the internet. If the will does not address it, then you have to look at the applicable state law for this, and states vary on that. The executor in that case will want to consult a probate attorney to sort that out.

 

[LdiJ]

Yep, because if the estate is illiquid the executor is going to need to sell at least one property to pay the bills ...and that may be political fun?

The OP very specifically said that the estate had other assets besides the two properties. Therefore those assets are either liquid assets or can be sold to become liquid assets.

 

[HRZ]

The OP wrote they were jointly held...which leaves open that they were JTWROS and passed by title and were not probate assets as such.

 

[LdiJ]

The OP wrote they were jointly held...which leaves open that they were JTWROS and passed by title and were not probate assets as such.

Go and read it again, that is not what the OP said.

 

[HRZ]

I can read that two ways : "The estate has other assets as well. All other assets are jointly owned."