When someone dies and their estate is passed on to their heirs it means the person left an inheritance. This can include things like property, titles and rights. An inheritance can even include certain obligations such as the decedent’s final tax return. Heirs must provide specific information relating to their inheritance before they can obtain the money that they have inherited that is in probate. One example of the information needed is the funding source.
While the money remains in probate, heirs and beneficiaries can obtain a probate loan or cash advance on their inheritance. Before an approval for probate loans is possible, heirs usually also have to give the decedent’s life insurance value on the date of the death. Heirs must also give the information needed on the decedent’s financial accounts. A fiduciary loan is different from a probate loan in that the loan is made to the trust, not to an individual. Fiduciary loans are not dependent as much on credit qualifications like probate loans are, because these are trust loans and they are more equity driven.
Inherited real estate can be sold after it has gone through probate. Heirs may be eligible for a probate loan to cover the cost of property taxes, etc. When an heir needs an inheritance loan they should ask the probate attorney about how to go about getting inheritance loans.
There are certain risks to consider when getting a probate loan. For example, if you get a probate loan based on real estate value you may be risking a value loss when you sell the inherited real estate, especially if a creditor has a claim on the property. In other words, the heir may be at risk for owing more on the loan than the amount they received from the sale of the property. Sometimes heirs will ask for a probate loan because of the length of time it takes for probate to complete. Here in the United States probate can take between 8 months up to 2 years to complete. Inheritance loans are a matter of practicality if there are bills and other expenses regarding the inheritance that must be paid on time. Read more.