Can I refuse to inherit a house with an underwater mortgage? - Estate Planning Law Questions and Answers-

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Can I refuse to inherit a house with an underwater mortgage?

My mother passed away and I inherited a house with a mortgage underwater by nearly 50k. I am the sole heir (mom's husband deceased, parent deceased, no grandparents, siblings, etc). There is a pending cause of action filed by my mother prior to her death, which is now an asset of the estate. There are no other assets in the estate. Question; can I disavow my interest in inheriting the underwater house so that it passes to NY State (by rules of intestacy) without also disavowing the potential payout in the cause of action? We've tried getting the bank to agree to a deed-in-lieu, but they are not being cooperative. We've also considered letting the house foreclose, but don't want thousands of dollars in legal fees slapped against the estate that will inevitably total more than the settlement payout. The estate has no money to pay the bills (mortgage, utilities, upkeep, etc) as I am currently paying out of pocket, and can't continue to do this. I want to preserve my interest in the settlement, but fear that I will loose this interest to the bank simply because I cannot afford to pay the mortgage. Any thoughts would be appreciated?

Answer By David Goldman
Apple Law Firm PLLC
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You can refuse the inheritance. In some cases you might have to file a disclaimer within 9 months. Regardless, the debt responsibility is not yours, unless you co-signed on the note. Often people inherit the homes, rent them while the foreclosure process is going on, and then abandon them with no liability. You should review your specific circumstances with an estate planning lawyer who is familiar with foreclosure defense.

Answer Applies to: Florida
Replied: 5/23/2011

Theodore W. Robinson, P.C.
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I believe you can decline a specific bequest and if that is what the house is, then I believe you can pick and choose which one you wish to accept and which one you don't want to accept. Speak to an Estate lawyer about this matter as I'm certain there is case law available to check for a legal precedent. Good luck.

Answer Applies to: New York
Replied: 5/20/2011

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