Private Note - What happens when the holder of the Note Dies?

[Daniel Dietz]

Hello,

I have been fine tuning my plan to seek Private Investors (all of whom I know personally). I want to make sure I have thorough, accurate, and easy to understand answers to the questions I anticipate they will likely have.

One thing that I have not seen on here and expect will come up is this;

• Say I borrow money from 'Bob' for a loan which may be a traditional loan or a non-recourse loan (if it is for the properties within my SDIRA). Assume it is 75K @ 6% with a 15 year amortization. Assume a mortgage is recorded and all other paper work is done the same as if borrowing from a bank or credit union.
• What happens if 'Bob' passes away while I still owe on this Note? Would it be 'called due', or would the Note just go to whomever he assigns (not sure if that is the right term) to in his Will?
• Is there a different tax consequence to the lender in either of these scenarios?
• Would this be any different if the lender was ALSO the owner of the property......... I am thinking in the case of a Land Contract?
• Thinking of 'older couples'..... say a farm couple both in their early 70s, or in any other case too, is there any pros or cons for THEM (it seems like it would not make a difference to me) whether one or both of them are the lenders to me as far as taxes, estate planning, etc.... goes?

Thanks for all the help you all offer here on BP,

Dan Dietz