talkrocfed1929 Asked September 2016
Mother's mortgage was left to me in a trust she has passed away how do I take ownership of her mortgage?
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She has passed away how do I take ownership of her mortgage?
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The Medicaid claim can exist but if the house is going into a trust it is not included in the asset of the estate subject to distribution to pay any claims. This is probably one of the reasons why estate recovery asks for a copy of the will in the initial notice of intent.
I knew compression tax rates applied to IRA distributions, but it wasn't until after the trust had been funded that I spent more time figuring out how the compression rates would affect us. There were some other issues as well but I need to review my lengthy notes to recall why we released the IRAs from the Trust.
I don't remember all the details, as it's been several years. I recall that it was complicated and took me a while to figure out.
Other assets could be released from the trust also by retitling. Real property could be conveyed by the Settlor back to him/herself through a Quit Claim Deed.
We didn't transfer any of the mutuals, but I believe it would have been the reverse of funding the trust - the fund holder had its own forms for retitling into the Trust, so I'm sure we would use the same forms to retitle it back to my father if that was the route we wanted to take. We probably provided a conformed copy of the Certificate or Trust Existence and Authority when the various asses were retitled into the Trust.
These are my best recollections; this was all done back in 2002 and 2003. I have to read my entire file sometimes to more thoroughly understand what we did and why. Sometimes I had to read my notes several times!
What I wrote assumes though that the Settlor is still alive to execute the transfer documents. If the Settlor isn't the Trustee, I guess the Trustee would have to execute the transfers, but if the Settlor and Trustee aren't the same, I'm not sure about retitling. I'd have to think about it to sort it all out.
The OP has an interesting situation; her mother is deceased, the trust has now become irrevocable. I think if she wanted to transfer the house out, it might have to be to the Trustee if there are no other heirs, but perhaps to the heirs if she's not the sole heir. I'm going to have to think about this issue for awhile though.
However, if she's the only heir, I suppose she could do what she wants, but she then would be individually obligated for upkeep and maintenance of the house, from her funds, not from trust funds. At least I think that's the way it would work. I need to think about this and let it bake like a cake before opining on something I'm not all that familiar with.
I do recall that the homeowner's insurance carrier wouldn't insure my sister's house since it was titled in the trust; the carrier would only insure us as trustees. The Secretary of State wouldn't retitle the vehicles in the name of the Trust, so I had to have them retitled in mine and my father's names.
I think a major question for the OP is also who is the trustee.
(I'll probably dream about this and sort it out mentally overnight.)
When it comes to the trust itself, you need to talk to the person in charge of the trust. I don't know the technicalities of releasing assets that are in trust. Do you know anything about that, GA?
Bequests in trusts are assets. A mortgage is not an asset; it's an obligation and can't be "left" to anyone either in a will or trust. Nor could other obligations such as credit card debt be left to someone.
Assets can be gifted; obligations can't. So the mortgage can't be left to you, nor can the "ownership" be left to you.
A mortgage is a contract between a lender and borrower, who must qualify for the loan. Your mother could have ASSIGNED her borrower's interest to you IF the lender agreed to that assignment, in which case an Assignment of Mortgage would have been recorded at the county level with a register of deeds or similar department.
There is no other legitimate way for you to become PERSONALLY obligated, or to "own" the mortgage.
If a house is mortgaged and the mortgage is in full force and effect on someone's death, the mortgage attached to the house is transferred as an obligation to your mother's estate on death, or as an obligation to a house which has been funded (transferred) into a trust. It is a debt, not an asset.
So, your mother could not "leave" the mortgage to you via a trust, nor could you "take ownership" of a mortgage.
As Katie suggests, what more than likely happened is that your mother owned a house subject to a mortgage. Title to that house was revested from your mother to her trust. The house was listed as an asset in her trust, and you inherited the house (encumbered by the mortgage), when she died.
If that's the case, then this is the situation:
Generally speaking, transfer of title w/o approval of the mortgage lender is considered an event of default. It's been years since I've read a residential mortgage, but I recall that there are familial transfers which can be exceptions.
In other words, if your mother sold the house, the lender would be notified and the loan would generally have to be paid off. If she attempted to just sign over the mortgage to someone else without the lender's permission, that would be an event of default.
If your mother left it to you as an inheritance, the mortgage default provisions might not necessarily indicate that this is an event of default, since it's an interfamily transfer.
If this is the situation, what you need to do is read the mortgage, or have a real estate or elder lawattorney read it for you and determine what notification the lender requires on death of the mortgagor (the obligor, your mother, under the mortgage she signed).
Then make that notification, in writing, by certified mail, indicating that you want to assume the mortgage (if that's the case). The lender will require detailed financial information to ensure that you can maintain the payments, have adequate credit, etc.
Depending on the lender, it may agree to an assignment of the mortgage obligations to you, or it may require a new mortgage.
If any of this doesn't make sense, post back and I'll try to explain it in more detail.
If all she left was the mortgage obligation, the mortgage holder is not going to agree to this. They want the property to secure the mortgage, and won't allow them to be unbundled. Besides, you do not was the obligation to pay for the house (the mortgage) without the title to the house in your name too