Inheritance & capital gains: Wills & Trusts

Linton

WorkingFamilyMan said:

Keep_pedalling said:

WorkingFamilyMan said:

Linton said:

A house with a mortgage cannot be passed on to the children. The mortgage as a debt of the deceased must be paid-off before the assets can be distributed. So either the money comes from the estate or someone else gets a mortgage in their own names. If neither is possible the house would need to be sold.

Trusts may possibly be appropriate once the mortgage has been paid but that very much depends on the circumstances.

The appropriate person for advice would be a solicitor.

Thank you. How does "someone else get" their own mortgage? Will this involve stamp duty etc.? Could they then change the title deeds to their own name if the Will names them as a beneficiary?

This makes little sense, What are you trying to achieve here?

I am sorry about my ignorance on these things.

So I understand the scenario where life insurance will cover the remaining mortgage. Loved ones can benefit it via a Will rather than leave it to law to sort it out.

But what about a house with a mortgage (without insurance) - can a potential beneficiary take a new mortgage and "inherit" the house (will they be subject to stamp duty etc,)? Can the house be left in the Will?

I hope the above makes sense?

The mortgage and the house are two separate things.

The house, with or without a mortgage, is an asset owned by the estate and so can be inherited by the beneficiaries without stamp duty.  The mortgage is a debt which the lender can demand is paid off on death, forcing the sale of the house if necessary.

There are several ways in which the mortgage could be paid off, this is of no concern to the lender.   It is up to the executor to ensure the debt is paid. It could be done using money in the estate. The beneficiaries could pay the debt either from their own savings or perhaps by taking out a new mortgage.  In the latter case, like anyone else,  they would have to satisfy their lender that they could afford it.   Alternatively a rich family member could help out with a gift.

RAS

The big issue would be whether the person/people remaining in the house had enough income to be able to obtain a mortgage for outstanding value?