Legal Question in Wills and Trusts in Arkansas
Are loans cancelled upon death?
My father financed my home for me, so I paid him my morgage payment. Just as I would as if a bank had financed my home loan. Now my father passed away recently without a will. I was told that all loans are cancelled upon death. Our lawyer that is handling his estate said that is not so. The home is completely in myself and my husbands name, we pay all the property taxes, and have been paying for it for several years. We had the contract drawn up by an attorney when we purchased the home, however there is nothing in the contract saying anything about the event of death. So please tell me what is the law in this matter.
2 Answers from Attorneys
Re: Are loans cancelled upon death?
Loans are not cancelled upon the death of the holder of the note. The note is an
asset of the estate and the fiduciary must collect it. I agree with your lawyer.
Re: Are loans cancelled upon death?
Loans are not cancelled on death. The loan becomes an asset of the estate, just like a savings account or CD. The balance plus interest due would still be owed but to the estate.
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