Who Is Responsible for a Mortgage When a Spouse Dies Without a Will?

By Beverly Bird

A mortgage is a lien against a piece of real estate and must be paid whether or not one of its owners left a last will and testament when he died. If a spouse dies intestate, or without a will, his estate is settled or probated according to the laws of the state where he lived rather than by his own wishes. His estate pays his debts from his assets, just as if he had left a will. Depending on how the deed to the home is held, this can happen in a few ways.

Surviving Spouse

Many spouses take out mortgage loans in joint names. If this is the case and your spouse dies, you are still a borrower on the mortgage and you are responsible for continuing to make the payments. However, federal law prohibits the lender from calling the entire mortgage due because one spouse has passed away. If you also held title to the home jointly in a deed with rights of survivorship, your spouse’s half of the home passed to you automatically at her death. Although you are now responsible for the entire mortgage on your own, you also own the entire house.

Mortgage Company

Some mortgages include a life insurance policy that will pay off the mortgage if the mortgager passes away. If your spouse has died, contact the mortgage company to find out if his mortgage included such a policy. Such an insurance policy would automatically resolve the mortgage.

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Insurance Company

A life insurance policy is not a probate or estate asset if it transfers to a named beneficiary other than the deceased’s estate. Therefore, it would not be subject to the laws of the state. The state cannot force the beneficiary to use it to pay off the estate’s debts, and creditors can’t make a claim against it, either. If your spouse had a life insurance policy with you named as the beneficiary, provide the insurance company with a copy of the death certificate and file a claim for payment. You can then use the proceeds to either make the mortgage payments while your spouse’s estate is settled, or you can pay off the mortgage entirely if the house passed to you when he died.

The Estate

If your spouse had more assets than debts and she owned the house and held the mortgage in her sole name, then the state will pay off the mortgage as part of the probate process. The worst-case scenario is that the house may have to be sold to pay the mortgage off if there aren’t enough other assets to cover the outstanding amount. However, when there is no will and assets are distributed to heirs according to the intestacy laws of the state, the surviving spouse is always one of the first in line to receive the remainder of the deceased’s assets after debts, taxes and funeral expenses are paid. If the mortgage can be paid off through other assets, in many cases, the spouse would receive the paid-off home as his share of the estate.

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