Deceased Estates

[Empty Pockets]

Hi,

Does anyone have any experience with how banks handle deceased estates with regards to lending.

I have a couple of IPs which are slightly negative geared before depreciation and just organising our wills for the first time. I would assume in the instance I passed away my next of kin would probably need to dispose of the IPs and pay out the loans. How agressive are the banks in pushing a sale quickly? Would they maintain the status quo if the repayments are continued?

 

[tobe]

Id like to find out too. I suspect they would be pretty quick to force the benificiaries to sell/refi, and I think the only way round this would be to transfer your IPS to a trust, which is an expensive proposition.
Perhaps another alternative at a slightly lower cost would be to hold each property as joint tenants with the proposed benificiaries.
that would still involve some cost to stamp duty and perhaps CGT, but on your demise the property would automatically transfer to them. Whether the lenders chase them to refi as quickly as through a will, again Im not sure.

Its such a shame the best way to hold property in an accuisition phase is diferent to later phases, and so costly to change, but then its only a drawback for negatively geared properties.....

 

[csc2]

dont know about other states but i have purchased three over the years...never any issue with banks from my experience..

unsure how it works in other states with regards to relevant r/e laws and requirements..cant see thats its any different to any other sale personally provided whoever has the authority to sell has signed off on the contract.

 

[RumpledElf]

The beneficiaries inherit the debt too, so I'd assume some sort of refinancing.

Friend of mine sold a house she was entitled to only 1/3 of (despite paying the entire mortgage for a year while waiting for the laywer to give the ok to sell it) and when the house was sold at a loss, the remaining debt somehow magically got distributed to the 3 beneficiaries. Which seems like the wrong word when you inherit a debt with no assets.

The executor of the estate handles all of this sort of thing so I wouldn't worry too much about it. I've just had my grandparents die so I'm sure hear about the ins and outs of this process first hand as their estate is cleaned up. I don't think I'm a beneficiary though, nor do they have any debt. Not holding my breath for a large cheque in the mail though, they've probably left everything to the kids not the grandkids.

My mother is in aged care assessment (she's the one who decides if an oldie is incapacitated) and has such scarey stories about kids squabbling over assets that having a will is an excellent idea.

 

[Dazz]

The advice we have been led to believe on this subject so far is that the beneficiary must be transferred free and clear title.

There can be no debt associated with the transfer to a beneficiary. No registered mortgages, no LOC's secured against title. Must be clear.

Makes the estate even "lumpier", especially if there are plenty of beneficiaries.

Hope that advice is wrong, but it sort of makes sense to me.....especially when you consider dumping highly negative CF properties on unsuspecting relatives who cannot afford it.

 

[WinstonWolfe]

Firstly, when you say deceased estate, what are you referring to exactly?

If you mean PPRs, you are generally talking about the death of the second partner, usually an older female. The male partner usually dies first.

In the overwhelming majority of these cases, the property has no mortgage as the owner has been retired for donkey's years and is debt free.


If there is a debt, the banks' foremost priority is to get their money back, post haste.

Beneficiaries have to approach the banks with the appropriate vehicle and capacity to purchase the property at market value and pay down the debt.

Banks are usually very quick to decide the capacity of the beneficiaries. Leniency is in short supply and the onus is on the bene's to get their cr@p together, before the lender commits to a mortgagee sale.

In anything other than a hot market, a prospective buyer (including the bene's), are better to haggle with the mortgagee before the auction. You need to 'discover' what price the bank is prepared to let the property go at. It could be well below market value, especially if you can offer an unconditional contract.

 

[Ausprop]

if you are talking a few mill of debt just match your life insurance to your debts. a bit harder to do of course when you have $30m of debt, in which case your detah benefit should provide a buffer whilst certain assets are sold down. For that level of debt you wouldn't be talkign about resi dog boxes leased to morons anyway