Need Advice

[Coronita]

Slight hijack…. I have a hypothetical situation I’d like some knowledgeable folks to chime in on…

Consider this… ..Suppose you’re inlaws decides to write you and your spouse for the full purchase price of the loan plus per fair/market rates on the loan…..However, the terms of the loan are you only need to make interest payments, but have one huge lump sum payment consisting of the entire principal say 50 years from now….

Consider also that your spouse is the beneficiary of his/her parent’s estate (in some shape or form…Suppose your inlaws pass away in some distant future and for argument purposes let’s say this loan ends up in their estate and you and said spouse are beneficiaries of that part of the estate…IE the specfics of the willing/trust etc say you and your spouse inherit the loan on that property….

a)Does this pose an interesting situation? (IE you owe said inlaws for the loan, but at the same time you now inherited the loan)?

b)Consider the other situation in that you and spouse refuse to pay the lump sum payment back to the estate, for which you inherit anyway… Normally, the creditor would initiate foreclosure, right? But how do you foreclose on yourself? Is there a way you (as the beneficiary of the estate) could just chalk up the unpaid loan as a non-performing/asset(IE loss)?

[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.

[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.

[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.

[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.

[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.

[Coronita]

[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.

[Coronita]

[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.

[Coronita]

[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.

[Coronita]

[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.

[Coronita]

[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.

[Diego Mamani]

It’s not asinine to ask 🙂

Once you inherit the note, there’s no loan anymore, so you can’t be in default.

Now, in your example I think you are saying that you stop paying after your in-laws die, but before you inherit the note?

Even in default, the note has some value, not zero. But you’re right, tax consequences can be complex.

[Diego Mamani]

It’s not asinine to ask 🙂

Once you inherit the note, there’s no loan anymore, so you can’t be in default.

Now, in your example I think you are saying that you stop paying after your in-laws die, but before you inherit the note?

Even in default, the note has some value, not zero. But you’re right, tax consequences can be complex.

[Diego Mamani]

It’s not asinine to ask 🙂

Once you inherit the note, there’s no loan anymore, so you can’t be in default.

Now, in your example I think you are saying that you stop paying after your in-laws die, but before you inherit the note?

Even in default, the note has some value, not zero. But you’re right, tax consequences can be complex.

[Diego Mamani]

It’s not asinine to ask 🙂

Once you inherit the note, there’s no loan anymore, so you can’t be in default.

Now, in your example I think you are saying that you stop paying after your in-laws die, but before you inherit the note?

Even in default, the note has some value, not zero. But you’re right, tax consequences can be complex.

[Author]

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