Legal Question in Wills and Trusts in Washington
inheritance of debt
I am bringing my parents onto my property to live. They are financing a manufactured home to live in. If one or both pass away prior to paying off the home loan, will I inherit this debt? They do not have enough assets to pay off the loan should one or both of them pass away.
2 Answers from Attorneys
Re: inheritance of debt
No, the basic rule of estate planning: you can only give away what you own. You will inherit their equity in the mobile home. You can choose to pay off the remainder of what is owed, or sell the asset, pay off the loan and whatever is left over, you keep.
Re: inheritance of debt
Well, my first question to you is whether or not your folks have a will prepared, and whether or not they purchased insurance on their mortgage to pay off the mobile home in the event they are unable to.
That said, if a lender is willing to bet that your folks will make the payments and satisfy the loan obligation without requiring a co-signer then your folks are liable to pay the loan, not you. Not now, and not if they die before the payments are finished.
Let's look at that scenario. Say they make the payments for five years (or ten, it doesn't matter) and then they die.
The lender can ask the estate to pay the balance - note that's the estate, not the child or the personal representative (You?).
If the estate is solvent, great. Pay the balance. If the estate is not solvent, the lender can get in line with everybody else.
The Big Issue is whether you co signed or not.
If this doesn't make sense don't hesitate to call me. Elizabeth Powell
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