Are you expecting an inheritance? If so, you may have plans for the money. However, probate can take a long time. If you want or need the money now, you may be thinking about getting an estate loan. Estate loans use your inheritance as a way to secure the loan. However, with fees or interest, they can substantially reduce the amount of money you receive. That means that inheritance loans are not right in every circumstance. Here are some things to consider when deciding if an inheritance loan is right for you.
What is an estate loan?
Estate loans, also known as inheritance, probate, or trust loans are loans based assets in the estate. The property must be in probate or trust administration. In other words, the heir is entitled to a portion of the estate but cannot touch the funds until assets are liquidated, bills are paid and permission is given for distribution.
Why get an estate loan?
There are several reasons to get estate loans. To pay estate expenses, advance funds to a needy heir, make repairs to an estate property, or pay for moving costs for an heir who couldn’t otherwise afford to move.
One of the top reasons people want an advance on an estate is to get their inheritance earlier. Do you have financial needs that need to be met before the estate can be probated? While getting an estate loan will come with fees and reduce the total amount of your inheritance, there is a time-value component to inheritances. Do you need money to pay off high-interest debts, take advantage of an investment opportunity, or even to cover living expenses? If so, it may be worth paying a fee to get the money earlier.
Settle Estate Obligations
There are several reasons to get an estate loan. One of the first things to consider is whether there are sufficient assets in the estate to settle obligations during probate. Probate can be a lengthy process. The estate may have obligations it needs to pay, but not have sufficient cash to pay for those obligations. Some obligations can be handled after probate. Other obligations need to be handled before probate is complete. For example, maintenance costs, living expenses, and funeral expenses all need to be handled when they arise.
If you need an estate loan, we can help. Contact us to find out more about your estate advance options.