Your Child Will Be Your Successor in Interest. What Does This Mean?

A successor in interest may be the person who inherits your home or otherwise receives an ownership interest from you. It’s a person who takes on the rights and responsibilities connected with the deed. In short: A “successor in interest” is someone who acquires an ownership interest from another party.

Your child would also be called a successor if you sold your home to them, or if you granted them the deed through a living trust, or they are vested with rights of survivorship.

Here are some frequently asked questions about how it works.

What Documents Will My Adult Child Need as My Successor in Interest?

If you leave your home to your child through a will or a trust, what they will need is:

• Their own officially issued photo ID.

• Your death certificate.

• Your instructions (such as your last will or trust document).  

Court documents, if the home goes into probate, would include a deed issued and recorded in the county that shows your child’s name on the new deed.

Is Probate Required for a Home I Leave to My Adult Child?

Usually, yes, if you pass the home through your will.

Your home should be able to stay out of probate if you’re using a method to that effect. For example, probate usually won’t come into play for a home held in a trust for your child, or you are using a transfer on death deed.

What If I Die Before Paying Off the Mortgage?

Your lender will, under the Garn-St. Germain Depository Institutions Act of 1982, let your loved one take the mortgage over.

This law stops the mortgage pay-off date from automatically accelerating. Your child may continue to pay the mortgage.

Unfortunately, the loan doesn’t end upon a borrower’s death. But there’s a major bright side here. If you’re like most homeowners today, you have a low mortgage interest rate, compared to current rates. Your child may be able to keep the existing loan terms, provided the loan is handled properly and payments continue.  (Your spouse would get the same benefit.) To begin the process of taking on the loan, your loved one should contact the mortgage company.

Who Is the Successor in Interest If I’m Leaving My Home to Multiple Children?

Both or all. There can be more than one successor in interest. Siblings can become successors in interest together.

One may wish to buy out the other(s). Or they may decide to sell and divide the proceeds. There are still other options, such as keeping the home and dividing rental income. Be sure they have a plan in place for sharing rights and responsibilities involved as long as they will hold the real estate.

Will My Child Be Able to Sell the Home?

Yes. Your adult child can establish ownership rights, sell the home, use the money to take care of any debt secured on the home, and receive what’s left over.

Rules for selling depend on state law and the title status. It’s best to call on a professional agent for guidance. If your child has questions about legalities in selling an inherited property, they should consult a reputable lawyer with experience in estates and real estate.

What Responsibilities Should I Prepare My Child to Take On?

Your adult child should be ready to update the deed under the new name. Your child will also need to take over home and garden maintenance tasks, and the utility bills, property taxes, and insurance. If the home is a condo or otherwise belongs to an association, the new owner must follow the rules of the association. Check local government websites for further rules.  

Finally, your child should be prepared to seek professional guidance if the title or mortgage transfer is delayed unexpectedly, if there are disagreements among successors in interest, or if help with understanding tax rules is needed.