Protect Your Heirs and Your Mortgage

When you take care of your estate planning, your house and any mortgage attached to it will be major considerations. Transferring a house upon death is not as easy as it sounds, and you can't assume that everything will go smoothly. You'll need to ensure you haven't left any loose ends because there are so many possible outcomes in this case. What happens to the mortgage and house when you die can change depending on different variables in play.

Guidance Varies Depending on Who Takes Over the Mortgage

One of those variables is who takes over the mortgage and house after your death. Your spouse will need to follow different procedures than if another relative inherited everything; if there's a non-spouse co-signer in the mix, then the advice will differ again. If no one is listed, then the process becomes incredibly complicated, time-consuming, and scary for those who still live in the house but who aren't inheriting it. You must set up a specific hierarchy of who inherits, such as first any co-signers, then your spouse if the co-signers have passed away and your spouse wasn't another co-signer, then your children if your spouse has passed away, and so on.

They Won't Have Much Time

Note that whoever inherits the house won't have much time to deal with transferring the mortgage; in many cases, payments will still be due on time with no delay. Talk to your mortgage company and find out exactly what your heirs have to do to preserve the mortgage and keep the house upon your death, and how much time they'll have. If you spell out the exact process in your will, then that will make things a lot easier on your heirs.

Liquid Assets and Due-on-Sale May Be an Issue

If you have enough liquid assets, you may want to specify that your heirs will inherit the house and not the mortgage and that the mortgage should be paid in full using your assets before they are divided up among the heirs. This is very important if your mortgage has a due-on-sale clause, which would require paying the rest of the mortgage loan immediately upon the transfer of the house. You don't want to stick your heirs with a major mortgage bill, especially if you anticipate it'll be too much for them to pay off. 

Planning your estate involves a lot of work, but it doesn't have to be an onerous job. With the help of an estate attorney, you can set up everything so that your heirs have as little work to do as possible. Learn more about the process by contacting an estate attorney.