Will question:

Seanymph

If there is a mortgage on a house.

And in the will the house goes to one person, and the remainder of the estate to another.

Does the mortgage go with the house or the estate?

kingstreet

The actual assets aren't the issue. It's their value which counts.

The value of the estate assets and liabilities is calculated. The liabilities are repaid, normally from the cash assets. This means the remainder is then split according to the will.

If the house has to be sold to realise enough cash to settle the estate, the property can't pass to the one who was supposed to receive it. In such circumstances, that beneficiary, if wishing to keep the property, should raise a mortgage to effectively purchase the portion they don't own from the Executor, who can then settle with the other beneficiary in cash.

Seanymph

The will says the house goes to X, with the rest of the estate going to me.

The mortgage is on the house.

How will that actually work?

(Sorry, your explanation was good, but I want to be sure I understand it).

dzug1

It's possible there is an endowment (or other) policy to repay the mortgage on death in which case the problem won't arise


(rest deleted as unsure of correctness)

Seanymph

Thanks - but they look like different answers to me.

So, to clarify.

The house is willed to X - they get the mortgage liability along with the property, have to organise that themselves.

The rest of the estate comes to me and I don't have to worry about repaying a mortgage out of it for a house I don't own?

opinions4u

Take legal advice. The will should be re-written for clarity. The executors need to follow the wording of the will. If it's unclear, the intentions of the deceased could differ from what actually happens.

jackieblack

Effectively, if the house is not owned outright, only the equity in the house can be bequeathed.

Seanymph

In real terms Jackie does that mean X gets the house less the mortgage - or the rest of the estate has to pay off the mortgage to give X the full market value of the house though?

antrobus

opinions4u wrote: »

Take legal advice. The will should be re-written for clarity. The executors need to follow the wording of the will. If it's unclear, the intentions of the deceased could differ from what actually happens.

Well exactly. The will should have been written in such a way that it's absolutely crystal clear what is supposed to happen.

Otherwise the provisions of the Administration of Estates Act 1925 - Order of Application of Assets where the Estate is solvent - would apply, see http://www.legislation.gov.uk/ukpga/Geo5/15-16/23/schedule/FIRST.

Seanymph

When the will was written there was no mortgage on the property - it was owned free and clear.

SINCE the will was written, giving the house to X and the remainder of the estate to me, there has been a mortgage raised.

So I need to know whether or not I will end up having to repay the mortgage or not.

And bless you all, I still can't work it out.

jackieblack

YOU don't have to repay the mortgage, but the mortgage will have to be repaid from the total value of the estate before anyone can receive anything.
What happens after that will depend on the net value of the estate and the value of the house.
Can you give us a rough idea?
Is the net value of the estate likely to be less than the value of the house?