Will abandoning a house left to us in a trust affect our credit?
A fellow caregiver asked...
My father passed away and left his house to us in a trust. He owes more on the house than we can get in this current market. None of us can afford to make the payments. Can we simply walk away and let the bank(s) have it? Would that effect our credit?
Expert Answer
Steve Weisman hosts the nationally syndicated radio show A Touch of Grey, heard on more than 50 stations, including WABC in New York City and KRLA in Los Angeles. He is a practicing lawyer specializing in estate planning and is admitted to practice before the United States Supreme Court. He's a public speaker and commentator who has appeared on many radio and television shows throughout the country, and he's the legal editor of Talkers magazine, the preeminent trade publication of talk radio. His latest book is The Truth About Avoiding Scams.
As beneficiaries of the trust, you have the ability to disclaim your interest by following specific state and federal laws that pertain to disclaiming or giving up your interest in the property that you would otherwise inherit. This will avoid complicating your own financial matters including your credit. Once all of the beneficiaries of the trust have renounced their interest, the trustee can then arrange with the bank to deed the property to the bank in lieu of foreclosure.