It may bring peace of mind to heirs to know that they will not be saddled with their parent’s debt in Michigan. However, someone who is looking forward to inheriting a home that was promised in the will could discover that the transaction is not straightforward.
According to Business Insider, during the probate process, the executor of the will or the administrator appointed by the probate court must identify assets and debts, and use assets to pay off the debts. If the deceased had many debts, and there is not enough money in accounts to pay them, the house may have to be sold to cover them.
Even if there are no outstanding debts to affect the house, the person who inherits it may still be faced with some issues to consider. For example, if there is a mortgage, the person who gets the house will also get the house payment.
Someone who cannot make the mortgage payments, or who is not willing to, has other options. He or she could sell the house, pay off the mortgage and keep the balance. If it is doubtful or certain that the mortgage balance is more than the value of the home, a person may need to ask the bank to agree to a short sale.
Alternatively, it may be an option to allow the bank to foreclose on the home. CNN Money notes that a foreclosure is unlikely to affect a person’s credit score, even if his or her name is on the deed. If the person’s name is on the loan, though, the mortgage company will probably report the foreclosure to credit bureaus.