[quote=Diego Mamani]That’s simple FLU… Once you inherit the note, you own the property free and clear.

But if your wife has siblings, they may jointly inherit the note… in which case you still have to pay back the loan.[/quote]

But let’s just assume that right now, there are no siblings to share the estate….If you (as the debtor) refuse to pay the loan, could you (as the creditor) simply not call the loan and just take the loss? I ask because, let’s say the current estate tax exclusion is $5million, and the estate holds a say $2.5 million note secured by some property. And since you (debtor) refuse to pay, it’s no longer “performing”… What amount is used concerning this note towards the estate tax exclusion computation? The original amount written on the loan ($2.5 million) or the current face value of the note ($0, since it’s no longer performing since you, the debtor, refuse to pay off the note)…More importantly, does the IRS require you (creditor) to actually try to collect on a loan. Or could you just eat the loan? And BTW, are loan forgiveness still not a taxable event in the current environment?

You know, I’m just asking because, well just asking. If it’s asinine to ask, so be it.