Budgeting Financial Planning Estate Planning Dealing With Debts and Mortgages in Probate By Julie Garber Julie Garber Julie Garber is an estate planning and taxes expert with over 25 years of experience as a lawyer and trust officer. She is a vice president at BMO Harris Wealth management and a CFP. Julie has been quoted in The New York Times, the New York Post, Consumer Reports, Insurance News Net Magazine, and many other publications. learn about our editorial policies Updated on January 14, 2022 Reviewed by Somer G. Anderson Reviewed by Somer G. Anderson Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. learn about our financial review board In This Article View All In This Article Dealing With Bills and Mortgages Before Probate Dealing With Bills and Mortgages During Probate Mortgages and Probate Frequently Asked Questions (FAQs) Photo: Echo / Cultura / Getty Images When a loved one dies and leaves property, debts, and a mortgage, and if he did not have a living trust, probate is required to sort everything out. Probate is the process of paying off the deceased person's final bills and expenses and transferring his property into the names of beneficiaries. Dealing with debts can begin before probate is officially opened. Dealing With Bills and Mortgages Before Probate Make a complete list of the decedent's liabilities, even before the probate estate is opened. It will help streamline the probate process later. Bills and statements you should look for include: Mortgages Lines of credit Condominium Fees Property taxes Federal and state income taxes Car and boat loans Personal loans, including student loans Storage fees Loans against life insurance policies Loans against retirement accounts Credit card bills Utility bills Cell phone bills After you've made a list of liabilities, divide them into two categories: Liabilities that will be ongoing during probate. These will be administrative expenses.Liabilities that can be paid off in full after the probate estate is opened. These are the decedent's final bills. Administrative expenses include the mortgage, condominium fees, property taxes, storage fees, and utility bills. These must be kept current until the estate closes. To the extent possible, the estate beneficiaries should pay these bills until the probate estate is opened. The deceased's final bills include income taxes, personal loans, loans against life insurance and retirement accounts, credit card bills, and cell phone bills. The estate beneficiaries should not pay any final bills out of their own pockets but should wait and let the estate's personal representative or executor deal with them in the process of settling the estate. With some liabilities, the beneficiaries will have to make a judgment call as to whether they intend to keep the assets with loans against them. If a beneficiary wants to keep the car or the house, he might want to continue paying down the debt. Otherwise, payments should be made from the estate. Dealing With Bills and Mortgages During Probate The personal representative or executor of the estate will be responsible for taking over payment of administrative expenses and settling the decedent's final bills after probate is open. This will include determining which debts are valid and to what extent, then assessing which, if any, of the decedent's assets, should be liquidated or sold to pay ongoing estate expenses and final bills. If the beneficiaries have continued to pay some or all of the decedent's bills prior to the probate estate being opened, the personal representative should then reimburse them accordingly, with one exception. If the decedent left real estate to a specific beneficiary in his will and that beneficiary intends to assume or refinance the mortgage against the property, he should not necessarily be reimbursed. Mortgages and Probate A beneficiary who inherits a house or other real estate may be able to assume the mortgage during or after probate according to the terms of the Garn-St. Germain Depository Institutions Act of 1982. This federal law forbids lenders from calling loans or foreclosing when ownership changes hands due to death. Typically, the mortgage must be current to qualify. Frequently Asked Questions (FAQs) What happens if the decedent had a reverse mortgage? The deceased's heirs would usually have the option of either paying off the outstanding reverse mortgage loan or paying the lender 95% of the home's appraised value, whichever is less. They have 30 days. They can also refinance or sell the property, but the reverse mortgage must be paid off when the homeowner/borrower dies and no longer lives there. Special rules can apply to certain surviving spouses. Are there any debts that don't have to be paid in probate? The estate must pay any debts owed by the deceased, provided that it has enough funds or property that can be liquidated to raise the cash to do so. The debts won't be paid if it doesn't. Beneficiaries aren't responsible for paying them unless they cosigned or are otherwise also obligors on the loans or debts. Different rules apply to spouses in the nine community property states. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. FDIC. "FDIC Law, Regulations, Related Acts: 8000 - Miscellaneous Statutes and Regulations: Part 591 Preemption of Due-on-Sale Laws." Consumer Financial Protection Bureau. "If I Have a Reverse Mortgage Loan, Will My Children or Heirs Be Able to Keep My Home After I Die?" Consumer Financial Protection Bureau. "Does a Person's Debt Go Away When They Die?"