Sue’s father, Luke, passed away last week. Sue is his only child and lived with him since her mother’s death six years ago. Sue needs to pay Luke’s funeral bill, but she does not have the cash (or credit card limit) to do it herself. And, as we explained last week, she also can’t get to the money he had in his bank accounts.
Sue figures she should get a quick and easy home equity loan from the bank. After all, her dad had the house completely paid off long before his death.
But the bank cannot give her a home equity loan either. Why? Because it is in her parents’ names only. “But I’m their only daughter and the house is mine now,” complains Sue.
The bank still cannot make the home equity loan; Sue does not have proof that she owns the home. In fact, the house will probably be Sue’s in the end, but not necessarily.
What if the bank let her have a home equity loan and then Sue’s cousin Gracie filed a Will for Sue’s dad that said that Gracie was supposed to get the house? That could be a problem for the bank, Sue, and Gracie.
Probate changes ownership via a court process, which prevents money from being taken based on a race to the bank by convincing relatives after a death. Until there are court documents saying who is in charge after death, no one is authorized to take out a mortgage or home equity line on the house.
For advice on avoiding or simplifying probate for your family in the event of your death, call our office at (815) 436-1996 for an estate planning appointment. © 2014 Gruber Law Office, Ltd.