Owelty To Settle a Trust
Using a/your mortgage or a new mortgage is a good way to pay off an owelty to Siblings upon liquidation of a parents property. There are a number of ways to use an owelty, and it is most commonly used in divorces. Lets use an example to explain. Let us say that there is a last surviving parent in a home that is free and clear or they can even have a mortgage, but there is enough equity that upon selling the home, there is funds that will be distributed to the surviving family members, usually siblings. If one of the siblings would like to keep the home, they can refinance the home and during that refinance, the equity in the home can be paid out to the surviving siblings. If say the home is a $400,000 property with a $100,000 current mortgage on the property and there are 3 siblings recieving equal amount of funds from the sell, the sibling keeping the home can refinance the property and through the owelty, (of the $300,000 in equity) your new mortgage would be $300,000. I get the $300,000 because there is already a $100k mortgage, plus the $200,000 subtotal that is beging paid out to the other 2 siblings at $100k a piece.