Settling the Estate

• 1). Settle the estate following the laws in your area. According to law all assets must be sold or liquidated and applied to all outstanding debt before children or other heirs can receive money.
  
  
• 2). Pay off all the debts you can using savings, money from selling stocks or other assets like the cars or other property she owns.
  
  
• 3). Determine if you want to keep the home. If there are many heirs, it may make more sense to sell the home and divide any remaining money between heirs, especially if there is a large amount of debt attached to the estate.
  
  
• 4). Put the home on the market and sell it for a fair market value. The mortgage company will receive the money that it is owed, and then the remaining amount will be applied toward the assets of the estate.
  
  
• 5). Send a letter to any remaining creditors after using all available assets to pay off debt, explaining that the estate has been settled and that there is no more money to pay off the remaining debts. If you do not sell the house for as much as the mortgage is worth, this letter can be used to have the remainder of the mortgage forgiven.
  
  
• 6). If there are no other debts remaining after this, any money left over can then be divided between the heirs of the estate.
  
  

Buying the House

• 1). Decide if you want to keep the home. You may want to keep the home to live in or to use as an income property. If there is more than one sibling, then usually only one person keeps the home. If there are enough assets you may not need to buy the sibling out of the home, and you may be able to use the money from the estate to pay off the mortgage. If there is too much debt in the estate you may not be able to keep the home unless you pay full market value for it.
  
  
• 2). Apply for a mortgage for the home. If the estate is in good standing without outstanding debt you may be able to borrow just enough to pay off the mortgage, or you may need to buy a sibling out of the home and borrow enough to pay off the mortgage and give him the value of the house. For example if the house is worth $100,000 and has a current mortgage of $30,000, you would divide what you would each receive less the money owed. If you sold the home to someone else you would receive $100,000 minus the $30,000, which is $70,000. Then you would divide that amount by two and you would each receive $35,000. If you want to buy him out and pay off the mortgage you would need to take out a loan for $65,000, give $35,000 to him and use the rest to pay off the mortgage.
  
  
• 3). Close on the home and distribute the money from the loan accordingly. For example, take the proceeds and give it to the estate and the mortgage company.