Borrowing Against a Future Inheritance
If you’re in serious need of money after a family member dies, you may be tempted to borrow against your inheritance. You know you’ll have the money in a few months, but you just can’t wait. Perhaps bills are piling up or the mortgage is past due. If you find you can’t wait for the inheritance to be distributed, you can consider an inheritance loan.
Reasons for Borrowing Against Inheritance
There are many scenarios that would cause you to look into inheritance loans. You may have been the caregiver for the deceased person and left your job to care for them. In return, they paid the bills. Now that they are gone, you have no one to help you get by until the inheritance is dispersed.
An inheritance loan can give you short-term funds to help you get by until probate is completed. Just realize that the probate process can take longer than you might think, which can impact the cost of inheritance loans.
How Probate Works
Probate is the legal term for dispersing an estate of a deceased person. It begins when someone files a petition with the probate court. The court appoints someone to act as executor of the estate or a personal representative. They are responsible for taking inventory of the assets of the estate and paying claims made by creditors. They will receive probate court certification that shows they can act on behalf of the estate.
The executor or personal representative must file taxes for the estate, pay the estate tax if necessary, secure assets, and care for the estate until probate is finished. This process can take months even if everything goes smoothly. It can take some time to inventory everything. Creditors are also given a few months to submit claims, during which time the executor cannot release any assets to the beneficiaries.
The executor or estate administrator may need to sell off some real estate assets or other non-liquid assets to pay creditors or to have funds to pay the heirs. This is another part of the process that can take some time, especially if real estate or a business are involved. The last step is to distribute the remaining assets to the heirs.
Issues with the Estate
If there are complications with the probate process, the process can be delayed. Family members may come forward and dispute the validity of the will. The probate court will need to hold a probate hearing and hear evidence by both sides and make a decision on whether the will is valid.
Other issues may arise during the probate process. For instance, a creditor may make a claim that the executor disputes. The court will once again need to determine which side is the truth. Every time an issue arises, it can add months to the process. It’s not uncommon for the probate process to last for years before it is settled and the heirs receive their inheritance money. You may want to consider an advance on your inheritance with one of the small inheritance loans available.
Can You Borrow Against an Inheritance?
It’s possible to get an inheritance loan based on an inheritance you expect to receive. Banks and other financial institutions are hesitant to lend money for inheritance funding because there is a great deal of risk involved with getting an inheritance early. You may find it difficult if not impossible to get a traditional loan. However, you can find other companies to provide inheritance loans.
You may need the money to make a mortgage payment, for living expenses, or medical bills. It may be impossible to apply for a personal loan because of past credit issues. This is when an inheritance loan can be the only option for your situation to get immediate inheritance funding.
You may hear many terms used when it comes to inheritance loans. They can be called probate loans or estate loans. These terms mean the same thing and describe funding based on a future inheritance.
Another term you may hear is inheritance advance. Also referred to as an inheritance cash advance, estate advance, or probate advance, this type of funding comes from inheritance advance companies.
Inheritance advances work differently than a loan because you aren’t responsible for paying them back. Instead, the inheritance advance company buys a portion of your inheritance. They pay you the money and put in a claim against the inheritance, which must be paid before you receive any of the remaining inheritance.
Inheritance advance companies charge a fee for this service, which comes out of the payment during the estate’s final distribution. The fee for an inheritance advance replaces an interest rate with a traditional loan.
How to Get an Inheritance Loan
If you are borrowing against your inheritance, you will need to prove that you are the rightful heir and that the estate is free from any liens against it. If you can do this, a lender may consider the application for an inheritance loan.
You will need to sign paperwork stating that you will repay the funds. You may be asked to make monthly payments on estate loans just like with other loans. You will be given an interest rate, which can be higher than with personal loans because of the higher risk. Inheritance lenders want to know that you are able to pay back the loan.
The inheritance loan company will likely only loan you a small percentage of the inheritance money. If you will be inheriting real estate or other significant assets, you could get approved for a larger inheritance loan.
Getting an Inheritance Advance
An inheritance cash advance is a way to borrow against your future inheritance. However, you don’t need to make monthly payments with an inheritance advance, and you aren’t held responsible to pay back the loan. Inheritance funding companies that provide a probate advance take all the risk. They must wait until probate is completed to receive their money.
Because of the risk and uncertainty, you will pay a fee for an estate advance from inheritance funding companies. The fee will be based on how much you want to borrow and how long it is estimated that it will be before probate is finished.
You can use the money any way you wish, whether it’s to pay bills and personal debts, legal fees, cover funeral costs, pay inheritance tax and other expenses associated with the inheritance, or to make a purchase. Inheritance advance companies pay more attention to the estate than to your credit rating and employment.
Refinancing Inherited Property
A third option for borrowing against an inheritance during the probate process is refinancing. You can refinance property that is part of your inheritance. This is usually in the form of real estate that is given to co-heirs.
In this situation, usually one heir wants to keep the property and buy out the other heirs. They can get an estate loan to refinance the property and use the money from the equity of the home to pay the other heirs for their portions of the asset. Once the property is in the one heir’s name alone, they can get a traditional loan at a lower interest rate. This type of estate loan is often based on the borrower’s credit score as well as the asset being refinanced.
What to Consider with Inheritance Funding
If you need money now and are considering an inheritance loan, you have several options. However, you should understand that inheritance loans are not regulated, which means that an inheritance funding company can use predatory practices. You need to do your research and know the terms for any probate loan or inheritance advances you apply for.
Fees with Inheritance Funding
You should also realize that you will be losing out on part of your inheritance with an estate loan. Even a reputable inheritance funding company must make money with these deals. They will charge an interest rate or inheritance cash advance fee in addition to the amount they loan you. That fee is taken out of your inheritance.
If you are willing to pay for one of the inheritance cash advances that are available, you should compare your options. You won’t be working with a traditional lender for a cash advance, but you can make sure all fees are transparent and everything is disclosed before you sign any documents.
Cash Advances Can Help
If you need the money from your inheritance immediately, you may want to consider how cash advances can help. Even a small inheritance advance can tide you over until you receive your full inheritance money. If you live where states charge inheritance tax, you may need the funds to help with paying inheritance tax costs.
If you can’t wait for the estate assets to be released, an inheritance loan can help. Probate is a lengthy process, which can tie up your inheritance funds indefinitely. Even if you have a modest inheritance, you can find out if you qualify for inheritance advances. You will find it difficult to get a bank loan, but a private lender or hard money lender can help with immediate payment once your application is approved.
Steps to Get Inheritance Funding
After you submit an application, the probate lender will discuss the case with your estate attorney. They will ask about your expected inheritance and determine the cost of the inheritance loan before they extend an offer. You will receive the offer and loan documents. If you accept the offer, you will need to sign the documents to get immediate cash.
Before You Borrow from Your Inheritance
Before you decide to borrow from your inheritance, make sure you do your research. Financial literacy is critical when looking at options for inheritance funding. Be prepared to lose some of your inheritance money by getting an inheritance loan. Make sure you check out any lenders you are considering working with before you provide sensitive information like your bank account.
Get the Details on Inheritance Funding
Ask about any hidden fees and charges that you may incur. Make sure you aren’t obligated to make monthly payments on the probate advances as you would with regular bank loans. Compare rates and other features of the inheritance loan companies and know what you’re getting. Immediate inheritance funding can sound good, but you want to make a sound decision with the company you choose.
Probate is a legal process that can take some time to complete. If you need money before you receive money or a real estate inheritance, you can get a cash advance. Just make sure you work with a lender that you can trust for an advance on your inheritance and understand the funding process. Probateadvance.com will help you with the inheritance funding that you need when you’re looking to borrow money without high interest fees.