In the unfortunate event that a loved one passes away, the last thing most of us want is for our assets and inheritance to get stuck in probate. Probate court proceedings can be a long and drawn out process that last for several months, and often occur when the last will and testament for the decedent does not exist or is not available for some reason. Passing on the property, titles, debts, rights, and obligations of the decedent is known as inheritance, and probate proceedings seek to prove the decedent’s will and sort out who is entitled to inherit their assets. Given that this can often be a long and arduous process, inheritance loans and probate loans exist to give the heirs and beneficiaries of the will a lump sum of cash.
There are several factors that could lead to probate proceedings being extended and drawn out for a long period of time, thus making an inheritance loan worthwhile. Firstly, creditors must be notified of the decedent’s death, and legal notices must be published. Additionally, if there are one or more heirs that contest the estate, it is possible for the probate process to be suspended for several months, leading to even longer wait times before the beneficiaries’ inheritance is received.
Inheritance loans exist so that beneficiaries of a will do not have to wait for the probate proceedings to finish before they receive their inheritance. The probate process is complex and includes various legal deadlines and regulations that can extend the process even further. Probate problems abound, and inheritance loans seek to ease the process for beneficiaries by distributing cash up front. An inheritance loan is not technically a loan. What the beneficiaries and heirs are doing when they receive an inheritance loan is assigning inheritance rights to whoever is funding the inheritance loan in exchange for the lump sum of cash. However, the funding source for the inheritance loan takes on a large risk with this exchange.
Inheritance loans are generally the last estate expense that is paid. If the decedent has debts that must be paid off, the property of the deceased owner will be sold. Any inherited real estate can be sold to satisfy debts to creditors before the inheritance lender receives any payments. The sale of inherited real estate may not be enough to repay the inheritance loan, so inheritance lenders usually require various documents before they determine if they will lend the money. An original copy of the decedent’s last will and testament, death certificate, and contact information for the probate estate executor are all required before the heirs are able to obtain an inheritance loan. Most lenders also perform background and credit checks on the beneficiaries to determine any issues that may prevent the heir from repaying the inheritance loan.
If a beneficiary is in need of immediate cash and expects probate proceedings to last for several months, an inheritance loan can be a smart financial decision. However, if the estate is small enough and probate proceedings will be relatively short, it may be beneficial for the heirs to simply wait out the probate process. Read more about this topic at this link.