I’ve got a mortgage on my house. How does that affect my will?

I’ve got a mortgage on my house. How does that affect my will? I’m Sarah Siedentopf. I’m an estate planning attorney in Atlanta, Georgia.

Mortgages generally come attached to the gift. So if you say nothing, you say so-and-so gets my house, they get your house and whatever amount of mortgage is left. You can also choose to say that the mortgage is paid off. That has to be specifically stated in the will, that the mortgage should be paid off prior to the gift.

So if you want the mortgage to be paid off, then it affects your will because you’re going to need to think about where are those funds coming from and make sure that specific funds are directed to that. It also affects things, because if we say, Oh, I’m gifting a $500,000 house to them. They’re gonna be set. But they also got a $350,000 mortgage attached to it. Yes, great gift. They’re 150,000 in the plus, but it’s not the same gift as a paid-off house.

So you do have to consider it in terms of who is getting what. And also, if you are giving it with the mortgage, which again is the most common, who’s gonna be able to pay the mortgage if, in fact, the house is, you know, trying to be kept and not sold.

Factoring the mortgage into your gifts and thinking about the strategy around it is really how it affects the will. Because if we just say so-and-so gets the house, they get the house and the mortgage, easy-peasy. And, you know, if we’ve got two kids and we’re like, everybody’s half and half of everything, we don’t really need to worry about the mortgage, because they’re getting half the house and, you know, half the value of the mortgage, and then, you know, half of everything else: it all evens out.

Certainly, we could decide that it’s in their best interest to pay the mortgage off first and make that decision for the beneficiaries, but we don’t have to do anything different. And most people don’t. It’s only when we’re dividing up assets and saying somebody gets the house, somebody gets the cash, somebody gets the vacation home, and dividing things up that way; that you really need to consider how much is it worth and how much is owed on it to figure out, you know, how are we making these gifts or are we trying to make these gifts even. But if you’ve got a mortgage and need to do a will or a trust, please give me a call. And also, please like and subscribe. Thanks.