What happens to my tenants when I die?

user1977

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

What would be the point in that? If the executors are selling the properties anyway, they can pay off the mortgages from the sale proceeds.

Life insurance only really makes sense if you've got dependants who will want to continue living in a property.

FlorayG

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

Why? Serious question. I can' t see any advantage to me in that; it will just cost me money while I'm alive. None of my beneficiaries are dependant on me

silvercar

FlorayG said:

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

Why? Serious question. I can' t see any advantage to me in that; it will just cost me money while I'm alive. None of my beneficiaries are dependant on me

Simple cost/ benefit calculation for your beneficiaries. If the cost of the premiums is less than the cost of the outstanding debt on the mortgages plus the interest you will pay between now and your demise, then the estate will be larger and the beneficiaries inherit more. If the cost of the premiums is more then they lose out, but your executors don't have the hassle factor of having to clear the mortgages.

FlorayG

silvercar said:

FlorayG said:

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

Why? Serious question. I can' t see any advantage to me in that; it will just cost me money while I'm alive. None of my beneficiaries are dependant on me

Simple cost/ benefit calculation for your beneficiaries. 

I don't think that they will want to pay the premiums and I'm certainly not going to 

theartfullodger

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

If you rent via an agent then your executors will advise them of your death and Letting Agent will start the process to end the tenancies. 
I
...

Rubbish.  I'm 76, small mortgage (less than £25k), cash in various bank accounts, no point in life assurance.

It's up to executors to end tenancies or not.  It might suit them to keep renting the places.

Who knows how law will change anyway by the time I (or anyone else ) pops clogs.

BikingBud

FlorayG said:

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

Why? Serious question. I can' t see any advantage to me in that; it will just cost me money while I'm alive. None of my beneficiaries are dependant on me

Perhaps but the effort to clear debts and release the residual estate may be significantly less if the mortgages are cleared by the policy, it might be a judicious choice.

You know who will be dealing with your estate, how savvy they might be, how they can deal with stress and hassle as well as the impact of the bereavement.

Insurance is not just monetary but also about peace of mind and given your original query:

 I'm just a bit concerned about the hassle my executors might have in getting them to leave so the properties can be marketed and sold

It might be the most effective route to address your concerns. Consider the whole piece not just the apparent costs.

FlorayG

theartfullodger said:

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

If you rent via an agent then your executors will advise them of your death and Letting Agent will start the process to end the tenancies. 
I
...

It's up to executors to end tenancies or not.  It might suit them to keep renting the places.

Who knows how law will change anyway by the time I (or anyone else ) pops clogs.

I don't think they can do that, can they? I would have to leave them the actual property for them to make a decision about selling or not. Also, I've not left the bulk of my estate to the executors.
As for 'who  knows?' that's the truth. I'm just curious really, because I may live to be 110 or I may sell both properties before I die or I may be run over by a bus tomorrow

FlorayG

BikingBud said:

FlorayG said:

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

Why? Serious question. I can' t see any advantage to me in that; it will just cost me money while I'm alive. None of my beneficiaries are dependant on me

Perhaps but the effort to clear debts and release the residual estate may be significantly less if the mortgages are cleared by the policy, it might be a judicious choice.

You know who will be dealing with your estate, how savvy they might be, how they can deal with stress and hassle as well as the impact of the bereavement.

Insurance is not just monetary but also about peace of mind and given your original query:

 I'm just a bit concerned about the hassle my executors might have in getting them to leave so the properties can be marketed and sold

It might be the most effective route to address your concerns. Consider the whole piece not just the apparent costs.

Having the mortgage paid off by life insurance doesn't actually address the problem at all. Even if the property is paid for, my executors still have to get the tenants out. There's enough equity in the property for the lender to be willing to suspend payments and wait for their return
The answer to my question really is, my executors become the landlord and have to go through the same process to remove tenants as I would. I think I will advise them to see what monetary difference there would be in selling with a tenant in situ. After all, by the time it happens it may be that private rental have become lucrative again!

BikingBud

Your executors do not need to get the tenants out!

The estate becomes the LL, slightly different.

Houses are sold with sitting tenants, you recognise this in your post, but by clearing the mortgage(s) the executors don't have the monkey on their backs wanting mortgage settlement.

Suspending payment will not suspend interest and will deplete the estate when it is finally paid, see @silvercar comment above.

It's like people railing against ERC when paying a relatively small amount, that will be include an offset for interest not yet paid, may be worthwhile if it gives you freedom of choice.

Before you discount it entirely have you investigated how much the insurance would be?

mlz1413

user1977 said:

mlz1413 said:

You should have life insurance to cover the mortgages, so they will be paid off on your death.

What would be the point in that? If the executors are selling the properties anyway, they can pay off the mortgages from the sale proceeds.

Life insurance only really makes sense if you've got dependants who will want to continue living in a property.

I believe the lender insists on it so that any amount owed to them is repaid on your death and they don't have to hope your assets cover the debt.

I wasn't aware it was personal choice. Certainly hasn't been for me but I also didn't have savings of more than I was borrowing.

As a 76 yo said he doesn't have it, then I guess if you can pay the debt out of your estate then it's the individuals choice.