Wills and Finance

[JoannaK]

Every night when I hit the sack my mind goes into overdrive and all these questions pop into my head, inhibiting my sleep.

Anyway, this was last night's question:

If my friend dies and she has a unit valued at $350k, but has a loan for $340k (for example), and she has left the unit to me in her Will, how does this affect the finance for the unit?

Do I, being the new owner of the unit, have to go through all the approval processes of the bank to continue the finance on the unit?

If yes, what happens if the bank thinks I can't meet servicability? Will I be required to sell the unit just to clear the loan?

 

[Aceyducey]

JoannaK,

I believe that if the loan & property were in her name, then the loan would have to be paid out, basically by selling the property, and you would get whatever was left according to your friend's will.

If the property was held in a trust with you as one of the beneficiaries the situation could be different depending on who the trustees were & who (if anyone) guaranteed the loan.

But I'm no legal eagle, this is simply what I believe would happen

Cheers,

Aceyducey

 

[sbe]

That gets into the whole insurance question too. Some loans are automatically paid out in event of death, many aren't

If it isnt, and no life insurance to settle debts, the loan would need to be settled somehow - either you arrange to take over loan or sell or refinance.

 

[JoannaK]

Thanks, I thought that would be the case.