[carelw]

My mother and I have been sharing the same home for three years. It was put into both our names via quit claim deed two months before her death; however, the equity line on the home (there is no traditional mortgage) is in her name alone. I have contacted the bank and let them know of her passing and kept up payments. However, we are now trying to work through her estate probate. Do her estate funds go that home equity bill or is the loan now assumed to be mine alone as I am now the only owner of the home? I am asking because there is money in the estate, and I would like to know if any of those funds can be put towards the HELOC prior to unsecured debt (credit cards). I do understand that I must pay for the home.

Thank you.

[ebaines]

I think the answer is... it depends. I assume that there are other heirs involved in this, correct? The question then is how the executor should partition the net value of the estate in such a way that is in accordance with the wishes of your mother's will. Depending on whether the estate assets are used to pay off the HELOC you may in effect trade off one type of asset for another. Perhaps an example would help explain what I mean.

Suppose the estate consists of $300K cash & investments and a HELOC with $50K loan outstanding (note - the house is not part of the estate because you already own that). Thus your mother's net assets are worth $250K. Now suppose there are two heirs - you and a sibling - and suppose the will specifies a 50/50 split of the estate between the two of you. That means that you should each receive $125K worth of assets. An equitable way to do that would be for you to take over the outstanding loan and take $175K in cash, and your sibling gets the other $125K in cash. Or alternatively the executor could use up $50K of the estate's cash to settle the HELOC, then you get $125K cash and your sibling gets the remaining $125K cash. Either way you both come out even with $125K in assets.

I think what is most likely to drive the decision of which way to go is whether you want the loan or not (in this example you get more up front cash if you take over the loan), and whether the bank is willing to transfer the existing HELOC into your name.

[AK lawyer]

... Do her estate funds go that home equity bill or is the loan now assumed to be mine alone as I am now the only owner of the home?.

The loan is still a liability of the estate. It just happens to be secured by a mortgage of sorts on property you own.