Three party question on mortgage and death.?

If the house is in your son's name, it's his house, and if your mother in law signed for the mortgage with him, most likely her name is on the title, too.

It's not your house.

It doesn't matter WHO pays the mortgage.

If she didn't BUY and PAY FOR life insurance every month, or once a year, then there is no life insurance to pay off the mortgage.

Worse, if her name IS on the deed, and she has ANY debts, her creditors CAN take ownership of the house as payment of her debts.

This sounds very fishy! The house CANNOT be in your son's name if you and your husband have a mortgage. Are you trying to shield assets from the taxman or bill collectors?

When a guardian signer dies, that does NOT eliminate the mortgage at all. The balance is still owed by the people who took out the mortgage.

EDIT: The house cannot be "gifted" to your son if it has a mortgage. Your terminology is very confusing and you should speak with the attorney handling your mother in-law's estate.

The mortgage is a legitimate debt of the estate. When someone dies, their estate must be liquidated to pay off all existing debts. If you, your husband, and your son do not qualify to assume this mortgage, then the house will have to be sold to pay it off.

Talk to the bank.

Sorry about your loss.

Actually you may have another problem.

The settling of your mother-in-law's estate may be noted by the court as signalling the need for a new guardian for your son. The next guardian could evict you - because its likely your son is the beneficiary of the life estate - not you.

You are obviously doing something weird.

As stated, you cannot have a mortgage on something you do not own.

Ask whoever told you to set up this odd arrangement.

Not with life insurance, but the friend may have meant what she left behind.

Many, many older people don't have life insurance.

But they have 401K accounts, brokerage accounts, savings, checking, IRA's, cars, and other assets.