If two people are on a mortgage, both are deceased, how would it be distrubuted to children?

Question

Heres the situation. My grandfather passed away with no will so the estate is in probate. My grandfather had 5 children, one child (my dad) is passed. My grandfathers mortgage was in his name and my fathers name. The executor is my Uncle. Im wondering why dads name is on there and what it means to my dads children. How would that be distrubuted? By the way this is in Michigan.

Answer 1

When you say "on a mortgage" you could mean 1) lender receiving mortgage loan payments or 2) debtor making loan payments.

In case 1, the loan (note) is an asset in the deceased's estates and will be distributed according to the decedents' wills or by the state's laws of intestacy if there is no will. The recipient of the note (heir) will receive future payments.

For case 2, read the note instrument and the mortgage instrument. most have a "due on transfer" clause that requires the loan balance to be repaid on transfer of the property. In a death transfer, generally the repayment is the responsibility of the estate before transfer to heirs.

Answer 2

If the deceased has left a testamentary document like will,the estate of the deceased will be distributed to the beneficiary under the will to the exclusion of all legal heirs.If the deceased has died intestate i.e without any such documents,the the successors to the estate will be determined according to the succession law i.e for Hindus.Hindu succession Act will determine the class of heirs and for others,Indian succession Act will determine the succession.The successors will have to share the liability under mortgage and the surplus will be distributed to them as per the mode described above.

Answer 3

A real estate mortgage is "in rem" (Latin). It attaches to the property, rather than to any specific person.

If the children are the heirs, or named in a Will, they inherit the real estate, SUBJECT to the mortgage.

Whoever gets the property, takes the mortgage along with it, unless the will specifically says that other funds of the deceased are to be used to payy off the mortgage lien.

Answer 4

Debt does not get passed on. But since it is a secured loan (secured by the house), the bank can sell the house if the payments are not made.

You can probably work it out with the bank. If you plan on selling it, they might let you slide on a few payment (they would still accrue interest). If you are going to keep the house, the children would probably have to get a new mortgage, although the current mortgage may be able to be assigned.

Answer 5

Have you check the debt instrument? Are there any type of insurance that goes with the debt/loan that covers incapacity or death of the mortgagee? There are mortgages that have this and it depends on what kind of insurance it has; sometimes if certain eventualities like this happens the mortgage is automatically paid up, like when my dad passed away the house mortgage that he had with my mom was paid up. In this scenario, nothing will be pass on to the children.

Answer 6

The best way to settle the estate is sell and devide proseeds to all children.

Answer 7

Probate.