Inherited Debt and Property
In the previous post, we discussed an important issue that might face many couples as they approach divorce: What happens to inherited property?
According to property division lawyers in Phoenix, Arizona law provides a clear-cut answer. Inherited assets are considered to be separate property, no matter when ownership is transferred. However, there is another side to inheritance: debt.
Certain things in life can’t be predicted, so a person might pass away with a major sum of mortgage debt. If this happens, beneficiaries could be handed the responsibility of the mortgage in addition to the residential real estate.
According to a report from SFGate.com, mortgage lenders may have the ability to demand mortgage repayment as soon as the property is transferred. In other words, beneficiaries may be required to pay a large bill immediately after an estate is executed.
Where Does Divorce Come Into Play?
In order to satisfy the mortgage lenders needs, a person may need to use funds from their own marital income or assets. As a result, the individual’s spouse might have a stake in the home after contributing to the mortgage repayment. As a result, any equity in the home might be considered marital property and, thus, would be subject to equal division.
This is a really complex situation that a divorcing couple may unwittingly find themselves in. Of course, this is not the only scenario in which property division becomes a serious challenge. Handling property appropriately is essential to a successful divorce settlement. After all, no one wants to worry about a legal dispute arising after they believe all is said and done.
SFGate.com, “Can You Inherit a House That Isn’t Paid For?” Tony Guerra, accessed July 3, 2014