Q: Are you required to sell the house to satisfy creditors showing outstanding debt/judgments on credit report of decedent?
My wife is an only child and explicitly exempts other siblings from the will. The will explicitly conveys the house to my wife. Her mother is a widow. There are creditors with an approx. value of 16K of debt owed. There are no other monies or assets (other than personal effects) than house. I value the estate at $275K with $117K owed on the mrtg. In Arizona, am I required to sell the property to satisfy these creditors, or is there something that states I have to force the sale of the house to satisfy them. We are considering keeping the property and assuming the loan, or possibly selling it after its conveyed.
A: You are not required to sell the assets but the debts should be paid to the extent of the value received by inheritance. Estate assets should not be accepted without paying the decedent's debts.
Also, the is a federal law called the "Garn Act" that prohibits a lender from demanding the full balance by reason of the death. In other words, you should still be able to make the mortgage payments in monthly installments.You do not have to assume the loan but can take title to the property "subject to" the mortgage.
Also, many creditors will accept less than the full balance for a lump sum payment.
You should consult a probate lawyer.
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