What is a Probate Loan?
If you recently lost a family member, you may be waiting on an inheritance. You may know that you’re going to receive a portion of the estate from your loved one, but you may have no idea when. If you need the money right away, you may consider a probate loan.
There’s a good chance you’ve never heard of a probate loan or aren’t really sure what one is. If that’s the case, this article will provide you with some basic information about what a probate loan is, how you can get it, and how it must be paid back. Before getting into the details on a probate loan, you should understand the probate process and what happens when your loved one dies.
The Probate Process
After your family member passes away, someone will file a petition with the probate court to open probate. This is a legal term that refers to distributing the estate to the beneficiaries after all debts have been paid.
The court will review the will to determine if it’s valid. If any of the beneficiaries believe it isn’t valid, they can dispute it. The court will have a probate hearing to hear the evidence and determine whether to follow the will or consider it invalid and use the state probate code to distribute the assets to the heirs.
What Happens with a Probate Estate?
The court also appoints someone to act as executor or a personal representative for the estate as part of the probate process. If the will named someone, the court will still need to approve it. They will receive letters testamentary to act on behalf of the estate.
The executor will take inventory of all assets of the estate and assign a value. They also must inform the creditors about probate and pay any claims that come in. The executor files and pays taxes, including the estate tax in states where it’s applicable.
When You Will Receive Inherited Property
Once all other steps in the probate process have been completed, the executor will distribute the remaining assets to the beneficiaries. Before this can happen, they may need to sell some assets, especially real estate. The inheritance money from the sales will be divided among the heirs. If the will stipulated that an heir was to receive a non-liquid asset, the executor must transfer title to the beneficiary.
How Long the Probate Process Takes
Even with no problems, probate can take several months to complete. The executor must meet certain deadlines and allow creditors time to submit claims, according to probate law. The entire probate process can take from six months to a year to be finished before the assets can be distributed.
If there are issues during the probate process, you can expect significant delays. The court may need to have a hearing to resolve the problems. This adds more time to the process, which can cause probate to last for years. If you are waiting on the inheritance money, you may find that you need to look at probate loans to help your financial situation until the estate is dispersed.
What is a Probate Loan?
Probate loans may also be referred to as inheritance loans, estate loans or even probate advances. While these terms are often used interchangeably, there is a difference between loans and cash advances. A probate advance functions differently than a probate loan. Before you apply for probate loans or other inheritance funding, you should understand what it means.
Where You Can Get Probate Lending
Probate loans are usually not provided by a traditional lender. Instead, you must seek out a hard money lender who will provide the funds based on your inheritance rather than your credit rating or employment history. Probate loans allow you to get your inheritance sooner than waiting for probate to be completed.
The probate lender will look at the amount of the inheritance you are expected to receive. They will also consider how long it is likely to take before the funds are dispersed. Based on that information, they will determine how much to lend with a probate loan. An interest rate will be calculated into the monthly payments, which you will be required to make until you pay back the probate loan or you receive your inheritance and repay the estate loan.
Probate lending companies understand how the process works and the lengthy process required to ensure they set the right probate loan rates. They can answer your questions, but don’t be afraid to talk with an experienced law firm as well.
How Do Probate Loans Differ from Probate Advances?
With a probate cash advance, you won’t need to make those monthly payments or pay interest. The inheritance advance is a purchase agreement. The probate lender will determine how much they will lend in a probate advance based on your inheritance just like with estate loans. They will charge a fee to pay for the risk they take with probate advances.
When the estate is distributed, the probate lender will be paid before you receive the rest of your inheritance money. If something happens during probate and you don’t receive any money, the lender of the probate advance cannot come back and demand money from you.
How to Find Probate Loans
Probate lending has gained in popularity, and you can find many probate loan companies online. You can usually apply online or by a phone call. Just make sure you read the fine print and understand the terms. Not all probate lenders are alike. Some will have hidden fees or other charges that they don’t include upfront.
You can also check with the Better Business Bureau on inheritance loans and the hard money lenders that provide inheritance funding. You may find some complaints as with any company, but they should be resolved or the company should respond to show they are reputable.
While you can expect to pay a higher interest rate or fee for probate loans, the cost should be fair with probate funding. Some predatory lenders take advantage of people in your situation and will charge extremely high fees on probate cash advances. Compare rates and terms for each hard money lender to find inheritance funding that is fair and fits your needs.
What You Can Do with a Probate Loan
When you get a probate loan, you aren’t restricted on the use of the funds. You can use the money to make mortgage payments, pay property taxes, funeral costs, legal expenses or for other outstanding debts. Use the money like a personal loan to pay creditors.
When you borrow money on a portion of your inheritance with estate loans, you can use the money any way you want. It’s often the only option for people who can’t get a home equity loan or other traditional loans to receive funds quickly. If you are inheriting real estate and need to pay property taxes on it, you can look to hard money lenders for probate funding.
What You Need to Know About Probate Loans
Probate is a complicated process that can take a long time, but you don’t want to rush into an agreement with any finance company that will provide loans. Consider how long it will be before probate ends and how much a probate loan could cost you. You’ll want to weigh the financial implications with an inheritance advance to determine if it’s the right move.
The funding company will want to talk with your probate attorney to find out the details of the estate and when final distributions are expected to be made. Once they determine you qualify for probate loans, they will provide an offer. If you choose to accept the offer, they will fund your bank account within a matter of days.
If you are concerned about your financial situation and getting a probate loan or probate advance, you can speak with a tax professional or probate attorney who will help you with these financial situations. Probateadvance.com seeks to provide transparent inheritance funding for customers who need cash right away.