[WSBAPT] Mortgage Assumption Question

[Heather deVrieze]

Jacob,

Transfers to spouse or to children on the death of a borrower are exempt under Garn St. Germain. I don't think it matters if the spouse receives a life estate and the children a remainder interest, both are qualifying relatives.

I think the bigger issue is the payment of the mortgage. I have worked with families in the past to agree that the life tenant receives the benefit of the interest deduction (for the interest portion of the mortgage payment) and the principal portion of each payment would be allocated to the paying owner's share of the property, either through a percentage calculation, or by simply keeping track, for repayment at sale (without interest).

I think ultimately, an agreement in these situations is better than fighting it out later, but can be hard to achieve. If they can't get along now, maybe selling and moving on separately makes more sense.

Heather

Heather S. de Vrieze
Attorney-at-Law
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jacob Menashe
Sent: Wednesday, October 19, 2016 5:11 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Mortgage Assumption Question

I have what I think is an interesting one. Husband and Wife each have a 50% separate property interest in a $400,000 residence subject to a $200,000 mortgage. Both Husband and Wife are on the mortgage. Husband dies and wants to leave Wife a life estate in his half of the residence residence, remainder to his kids. What happens to the mortgage? Can Wife keep on paying? I can't tell if Garn St. Germain will apply. I also realize there's a question about who should get what if Wife pays the mortgage, but that's beyond what I am thinking about now. My concern is what will happen to the mortgage - i.e., Is Husband leaving Wife a life estate in his half even an option?

Thanks for any thoughts on this one!

Jacob Menashe

Hickman Menashe, PS
4211 Alderwood Mall Blvd., Suite 202
Lynnwood, WA 98036
(425) 744-5658 phone
(425) 744-6078 fax
Satellite Office in Bellevue
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