What happens when I die

[Stone Jin]

As we are doing estate planning we are coming across this bizarre question.  Let's say I currently have 10 mortgages and my wife has 10 mortgages.  If one of us were to die, would the other assume the mortgages even though we are maxed out on conventional loans.

Thanks in advance.

[David Dachtera]

@Stone Jin,

The obvious answer would be get those loans and the properties securing them into a business entity structure.

As assets, the businesses become willable.

As properties securing loans, that all stays with the business entities.

Right now, you get money - from rents, etc. - and you pay YOUR mortgages and property expenses. Anything left over is potentially taxable income to you. When you die, your survivors have to deal with the debts not covered by your life insurance (if you have any).

With the properties in a business entity structure, those businesses receive income from properties, pay the property expenses and debt service, and the surplus comes to you as potentially taxable income. The difference is that when you die you can will the businesses to your survivors. The debts stay where they are, and your heirs (continue to) receive the income.

Now, I'm not a financial or legal professional. Your estate planner, accountant and/or attorney can go over this with you and show you how to make it work for you.

I can refer you to some resources, if you need them.

David J Dachtera