Probate is expensive, time consuming and part of the public record. Learn more here, including how to avoid it.
An entire industry is devoted to helping new heirs to receive part of the money they are due to receive in advance of the settlement of the estate. Inheritance loans, advances on inheritances, and probate cash exist to help new heirs. Learn how to access estate money long before the estate is settled.
The concept behind inheritance loans is simple. You are named an heir to part of an estate. You may need to wait months, or even years, before the legal issues are settled. How can an heir get access to the money they know they will receive eventually?
This is where inheritance loans come in. An inheritance funding company offers heirs an opportunity to get an advance on inheritances. For amounts ranging from $5000 to $100,000, a recipient can apply to get part of the money now, to help with current life expenses.
Related Reading: Inheritance loans, real estate investing, executors, avoiding probate and alternatives.
To apply for probate cash with these inheritance funding companies, an heir takes proof of the inheritance and fills out a lengthy application form. Typically, the funding company offers an answer within five to seven days, and the advance on inheritances can come as quickly as a few weeks. This is a stark difference from waiting for months, or years, to see the inheritance money.
Inheritance loan processors will do a complete credit check with the application, as the company has a vested interest in making sure that they get their money back in the end. Heirs with current bankruptcy proceedings, or with property liens may not be able to get an advance on inheritances as a result. Bad credit won't stop you from getting probate cash; it's only current liens or bankruptcies that can cause problems.
Advance on Inheritances
These advances on inheritances, though, come at a price: 10 percent to 40 percent of the total value of the estate. In other words, you're trading money now for losing a lot of probate cash later. For instance, if your inheritance is $100,000, a company may offer $50,000 as an advance on inheritance, but take 30 percent of the total. That means you get $50,000 now, but the company gets $30,000 when the estate is settled. That's a very expensive inheritance loan.
Knowing whether to take an advance on inheritance is never easy, and every heir needs to make the choice that is right for his or her lifestyle. In the end, inheritance loans are just another tool for consumers, to help with personal finance and life money issues.
Advance Inheritance - Tips for Receiving Inheritance Money Held in Probate
Advance inheritance funds are provided by cash lenders and private investors to beneficiaries entitled to money held in probate. When a person dies everything they own is transferred to probate. The exception to this rule is when the decedent executes a Revocable Living Trust.
An estate executor oversees the estate and is responsible for taking inventory of assets, paying outstanding debts and filing a final tax return. Estate assets are typically held in probate for a minimum of six months. In some cases, probate can take three years, or longer, to settle.
Applying for advance inheritance is similar to applying for a loan. However, no interest is charged and the advance is not repaid by the beneficiary who receives it. Instead, advance inheritance monies are reimbursed to the funding source when the decedent's estate is settled.
In most cases, funding sources provide inheritance cash advances when beneficiaries are entitled to $10,000 or more. However, some cash advance providers are willing to work with heirs whose inheritance is as small as $2500. If you are entitled to less than $10,000 in inheritance money, seek out private investors who specialize in this niche.
When seeking advance inheritance funding, beneficiaries are required to provide personal information such as their date of birth and social security number, along with documentation pertaining to the estate.
Funding companies will require the name and address of the Estate Executor and attorney handling the estate. A copy of the decedent's Last Will and Testament, Petition for Probate and death certificate must be provided. If the decedent owned real estate, the lending source usually requires a copy of the listing agreement or sales contract, along with evidence of property insurance.
Funding sources will obtain a credit report to determine if the applicant has judgments, tax or creditor liens, child support or bankruptcy proceedings which could interfere with payment of the assignment.
Once documents have been verified, the funding source will distribute advance inheritance funds within 3 to 5 business days. This timeframe can vary depending on the amount of the advance and procedures instituted by the funding source.
Private investors and funding sources that provide cash advances for forthcoming inheritance assume considerable risk. In some instances, there may be insufficient funds to repay the advance. When this occurs, the funding source absorbs the loss because the beneficiary is not responsible for repayment of the advance. Additionally, the funding source must wait until the estate is settled to receive a return on their investment.
Inheritance cash advances generally range from $10,000 to $100,000. As a general rule, advance inheritance cannot exceed 30-percent of the beneficiary's anticipated distribution. Once beneficiaries agree to the transaction they assign their inheritance rights to the purchaser in exchange for the upfront cash payment. Typically, a fee is charged and deducted from the advance.