Q: Is an unfinished home's mortgage considered a debt when an estate is being probated?
Home was halfway finished when the person died. The home has a large construction loan that would exceed the amount of the inheritance. The will was in order, and assets are equally divided between the children and current spouse.
A:
A mortgage would typically be a debt of the estate and the mortgage company would be entitled to file a claim. Whether the construction was complete or not, if the decedent signed a promissory note, the estate is probably liable. However, claims only need to be paid if the creditor files a timely claim (and if there are assets in the estate to pay the claim). It is usually important to provide notice to creditors during the probate process. If notice is provided and the claim is not filed within a certain time period, the creditor is barred from collecting. It is probably important to discuss any potential claim with legal counsel and determine the level of the estate's exposure.
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