Legal Question in Wills and Trusts in California

What happens to private party note when person dies

My father passed away 5 years ago. My mother sold her home last year and loaned me a portion of the funds. We secured this transaction by recording a note and putting a lien on my home. The plan was for me to reimburse the money to her after the sale of my home, put down the remaining amount from the proceeds of my home, so we could pay off the house free and clear. We would then live there together until she passes away and then the home would be mine. However, before we could purchase the home, she was admitted into the hospital and we don't know if she will make it. My question is, If she passes away, what happens with the note when I sell my home? Who does the escrow give the check to? Will I be taxed on this money, Or is it considered my inheritance from my mom since the loan was funded from the house that was to be mine in the event of her death.


Asked on 10/10/05, 3:29 pm

1 Answer from Attorneys
Scott Linden Scott H. Linden, Esq.

Re: What happens to private party note when person dies

The note will be passed along to her estate. Does she have a will or a trust? You might want to explore that option ASAP, (how is her cpacity?). Without one, or with only a will, her estate will have to go through Probate.

Regardless, the note passes on to er estate and the person appointed in charge of this will be required to recover on the note.

Since it seems (no additional facts were provided otherwise) that you have no siblings and your mother did not remarry, then you are the next of kin and will inheret her estate. As such, the note passes to you. Accordingly, the value of the note is included in her estate. Though not taxable as income to her or you (as it was a loan) the total amount outstanding on the note is included.

Please feel free to contact our office for a free and confidential consultation so we can better discuss your situation.

I can be reached at the number provided by LawGuru or through our firm's website at No-Probate.com.

Scott

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Answered on 10/11/05, 3:36 pm


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