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Do your heirs owe your mortgage after you pass away?

As you write your will and attempt to decide what to do with your family home, you realize that you could still have an outstanding mortgage loan when you pass away. In an ideal world, you'll pay it all off first, but you never know what the future holds.

If you pass away and the loan still exists, are your heirs obligated to pay it? After all, they had no say in accepting or taking out the loan in the first place.

On those grounds, they're not obligated to do anything. Don't worry about giving them debt they can't afford. They never have to pay off your mortgage. Your estate has to do that.

There are many ways to address it. Your heirs could sell the home and pay off the loan with the money. They could take the necessary money from the existing estate. In some situations, the home just goes into foreclosure. Odds are your heirs will sell it before letting that happen, though.

What if they want to keep it? They can. You can leave it to them in the will. They just have to take over where you left off and pay off the loan as their own. Better yet, federal law means that lenders can't demand full payments of the balance of the loan or deny heirs based on their perceived ability to pay. Your heirs get a chance to take over that mortgage if they want it.

As you do your estate planning, think carefully about your options to influence your heirs' financial future and pass your assets and debts on.

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