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Mom is co-signing mortgage for her son -- what happens when Mom dies? She is not on title, just the mortgage.

Park Ridge, IL |

Will her estate have to pay off the entire mortgage? If so, there'd be nothing left for other children.
***What if she does planning and puts her assets in another's name or irrevocable trust? Is that allowed to make her estate poor, so if the bank went after her money in probate=there was nothing there to claim?
Thank you.

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Attorney answers 5


You're asking two totally different questions.
1. Mortgage loan: depends on the loan terms but while the death of a borrower normally needs to be reported to the lender, if there is a co-borrower still around banks generally won't "accelerate" (call the loan) or foreclose as long as payments are being made. The terms should be fully spelled out. If you want a more "legal" answer you will need to have an attorney review the loan paperwork. But if SHE is really going to pay the loan for you, then see the following:
2. She can create an estate plan; it's her money. If she wants to make it so all her money goes to the mortgage, she can do that. Of course this can create bad feelings among the siblings, but legally if it is done right that's an entirely different problem. However, depending on the plan is set up no, she can't make herself "poor" without risks. For one thing, if she sets up a trust for you that she can't touch but dies within 5 years and during that time winds up on any kind of public assistance, the government can come in and "undo" the trust. Banks today may also see that kind of a transfer as being a "fraudulent conveyance" and attempt to undo it by coming after the estate AND you. So before making plans that could easily fall apart, she certainly should get advice of counsel; I'm sure the last thing she wants to do is create problems for her estate, or for you.


The general rule with mortgages is that so long as you are making timely payments, the death of a co-borrower will not effect the loan. If you are habitually late or behind on payments, the lender may look to the estate, subject to the terms of the loan agreement.

The next part of your question has to do with estate planning. It is possible to execute planning today to make your mother appear destitute upon her death, but that is not the ideal move. You should consult with a local estate planner to create a comprehensive estate plan that allows your mother to accomplish her estate planning goals. Whether that is taking 100% of her assets to pay off the mortgage or splitting everything evenly among her children, that is mother's decision to make.

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As both attorney point out this is really an estate planning question. Your family would be well served to have mom talk with an estates attorney BEFORE she takes any action.

For more on estate planning and other issues, see Estate Planning Mistakes: 5 Not So Easy Pieces at Please hit the like button at the end of the article if you found it helpful.

For more on talking with aging parents about this topic please read Estate Planning For Elderly Parents: Discussing Finances and Estate Planning with Your Aging Parents at the following link: Please hit the like button at the end of the article if you found it helpful.

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I suggest your mother act carefully in transferring all of her assets to make her estate poor. Before taking any type of move like this, it is very important to consult with an estate planning attorney. Transferring assets to hide them from creditors can be fraudulent transfers that creditors can reach. On the other hand, there are various estate planning tools that may be extremely useful to your mother in this situation. I agree that the time to address this is before your mother takes any actions - it is much easier and less expensive to set things up correctly in the first place than to try to fix them down the road.


Yours is actually a series of questions, with a proposed solution that's a bad idea. You need to hire a lawyer to walk you through this. Its complicated, but here's a basic explanation (although the laws of every state are different).
First, a mortgage is a document that, if handled and recorded properly, gives a lender an interest in a piece of land as collateral for a loan. Your mother could "pledge" her land as collateral for the debt of her son. If the son doesn't pay, your mother's land can be foreclosed on. If the foreclosed land is sold and the proceeds exceed the debt, your mother gets money back. If the proceeds are less than the debt, she is no on the hook for the rest of the debt UNLESS she also signed the document that CREATED the debt - called a Promissory Note.
If mother has already pledged the land by signing the mortgage, its too late to undo things. She probably cannot renege on the deal without causing the bank to threaten foreclosure. Nobody can force your mother to pledge her asset for somebody else's debt. That's a voluntary action. So why worry about making her poor? If anyone is putting her asset at risk, its her! If she's not doing it voluntarily, then ask your lawyer. Something bad and possibly illegal may be going on.

By answering this question, I'm not creating any attorney-client relationship. I have no expectations of the questioner, and accept no obligation to act as their attorney. ALWAYS consult local legal providers -- rules are different in different states. All my comments are aimed at helping you THINK more clearly about your own situation, and gain some small confidence that you can really explain your needs to the lawyer you select.

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