Q: My ex-husband is deceased, and we had two sons together. They are 34 and 35. His sister asked me to handle his estate and to help the boys with it. He has a house with an insurance policy that will pay for the mortgage for one year. We’ve applied for that, but he is upside down in the mortgage. He owes over $70,000 on a $30,000 house. Also, there isn’t a lot of money or other assets in the estate to pay off the house. What options do we have for this upside down house?

A: First, I think it’s inappropriate for your sister-in-law to ask this of you because your sons are adult men. You can help them with the estate, but you can’t be responsible for it.

The insurance money that your ex-husband purchased wasn’t smart financially. He bought credit insurance, which pays off one or more of his existing debts in the event of his death. He should have bought term life insurance because your sons could have received a lump sum instead.

If the house is upside down your sons can decide whether or not to take it. They do not have to accept it as an inheritance. This may not be well known, but if somebody dies and leaves you something, you don’t have to take it. They can rent out the house, hand it back to the lender or have it show up as the estate’s responsibility and record.

It sounds like your sons need some sort of estate attorney to go through what they’re going to keep, what they’re not going to keep and what they’re going to do. Find someone to help and make sure this loan gets paid out quickly, and that the estate gets closed. Taxes shouldn’t be an issue because as you said, there is almost no money in the estate.

So you have a few options. You, or the estate, can let the house go back to the lender. The rest of the money will simply get paid out to whatever creditors are there, and you will take the personal affects that you want. That’s probably how the property is going to disappear, and that’s not such a bad thing.

WSB Radio’s Ilyce Glink Show – May 4, 2014

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