What to do if my mother passed away recently and she had left her home and all bank accounts in trust to me?

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What to do if my mother passed away recently and she had left her home and all bank accounts in trust to me?

I am unable to purchase/sell her home as it is not worth what the mortgage company is owed (upside down by 50,000). If I surrender the house to the mortgage company, will that be enough to satisfy her loan? Or will they come after the small amount of life insurance and money she left to me as well?

Asked on January 7, 2013 under Estate Planning, Illinois

Answers:

Catherine Blackburn / Blackburn Law Firm

Answered 8 years ago | Contributor

You should consult a lawyer in your mother's area for a specific opinion.  How to proceed depends on a number of factors.  First, how did your mother leave these assets "in trust" to you?  By will?  By trust?  Was the home titled in the trust?  Are the bank accounts titled in the trust?  Is the trust listed as a beneficiary on the bank accounts?  Are you listed as a beneficiary on the bank accounts?  Is the trust the beneficiary of the life insurance, or are you the beneficiary?  Who is liable on the mortgage for the house?  With the answers to these questions, a lawyer can advise how to proceed.

As a practical matter, I suggest you consult a lawyer before you pay anything on the mortgage.  Mortgage companies are often willing to short sale properties or take a deed in lieu of foreclosure, but they usually won't even talk to you if the mortgage is current.  Since you are not liable on the mortgage, it will not hurt your credit if the mortgage goes into default.

I am sorry for your loss.  You need assistance to sort this out in the best possible way.


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