Dear Real Estate Adviser,
My friends’ son committed suicide, leaving a huge financial mess. He owned his own home, which will go to them once it clears probate (he was single, no children). My friends have their own home and cannot afford to maintain a second. They will have to sell it, but the son’s house is seriously underwater. What options do they have?
— Tessa

Dear Tessa,
My condolences to your friends and their family for their loss.

Unless your friends served as co-signers, they are likely not responsible for their deceased son’s mortgage. Unlike some other countries, there is no “feudal bondage” here that obligates people to honor financial arrangements made by adult members of the immediate family. One exception is the obligation of spouses to their husband’s or wife’s mortgage debt in some community property states.

When a person dies intestate (without a will), the court typically appoints an administrator to distribute the decedent’s assets, or estate, according to state law. If the estate is insolvent, which appears to be the case here, creditors have no legal right to collect the debt from parents, siblings or other family members barring any co-signings or similar joint-responsibility arrangements made by them.

Any assets from the son’s estate will be distributed to survivors after debts are settled. Since the deceased son had no children or other descendants, the parents are in line to receive those assets, but not the liabilities. Since the son’s mortgage will go quickly into arrears unless the parents are making payments, the bank will probably take possession of the property by foreclosure

Another note: If any relatives of a deceased person are beneficiaries of a life insurance policy, that money should pass through to them and not have to be used to retire financial obligations or other estate-settling costs. Of course, that payment may be rendered void in the case of suicide.

If they haven’t already, it is probably best that your friends contact a qualified probate, family law or estate attorney experienced in such matters for advice in unraveling this affair. It sounds as if the financial mess they are untangling is daunting. They certainly do not want to volunteer to do anything concerning their son’s estate obligations without the guidance of an experienced attorney, lest they end up bearing personal responsibility.

But given the information supplied, it does appear your friends are off the hook for their son’s debts unless they step forward to accept them for some reason. True, it is not beyond bill collectors to try to pin such fiscal responsibilities on them and say they have some sort of moral obligation to pay. The truth is they likely have no such responsibility.

Good luck!

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