Encumbrances On Bequests

Encumbrances On Bequests

Encumbrances On Bequests

Encumbrances On Bequests

If some property which you bequeath or devise is subject to a lien, mortgage, or chattel mortgage, the beneficiary would berequired to take the property subject to the lien or mortgage unless you insert a specific provision in your WILL exonerat ing the property from the encumbrance. In the absence of such a provision, your legatee or devisee will be unable to look to the estate to discharge the lien or mortgage.

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If you want to pass on the property clear and free, tell your lawyer so he may include a provision to that effect. The rule is the same whether you are dealing with family heirlooms such as watches or jewelry, the family home, or commercial prop erty. You may have bequeathed to your grandson the gold watch and chain which you inherited from your own grandfather, but at your death it may be at the watchmaker's for repairs and his charges may exceed the value of the watch. You probably wanted your grandson to have the watch free and clear of all charges.

However, his wife may object to his spending $150 for the repair of a watch with a commercial value of $50. If your home is the subject of a devise, you should consider whether you want the devise to be free and clear not only of the mortgage charges, but also of real estate taxes or assessments which have been levied at the tune of your death or which may be levied subsequent to your death. You may consider a general clause such as: "I hereby direct my execu tor to deliver to the devisees and legatees named in this WILL, all legacies or devises free of any liens or encum brances of any nature whatsoever." In considering whether you want to include such a clause, you may take into account the overall condition of your estate whether any assets owned by you have been acquired by you as speculations, and the effect on the other beneficiaries of your estate. For example, if you have purchased a large tract of land as a speculation, with a small down payment and a large mortgage, you may want to pass on to a specific legatee the same chance of appreciation which you took when you made the purchase, but without subjecting your estate to the full gamble but only to the gamble of the small down payment. You should decide whether you want to give your executor the discretion to exonerate the legacies, or whether you want to designate the specific legacies which are to be delivered free and clear of any liens.

Discuss this matter in detail with your lawyer because inmany states the rule is that the devisee of land subject to a mortgage executed by the testator in his lifetime is entitled to have the mortgage paid from the personal estate of the testa tor, but that a different rule applies where the land has been acquired subject to a mortgage executed by a prior owner. In the latter case, the land is the primary fund and no personal obligation is imposed on you as the testator.

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