Heirs can receive probate cash advances using inheritance property as collateral. Probate refers to the process used to settle decedent estates that are not protected by a trust. Probate is required within the U.S. to validate decedents last Will, pay outstanding debts, and transfer property to rightful heirs.
Probate cash can be obtained through funding sources such as cash advance providers and private investors. Some banks and credit unions offer advance funding when heirs are entitled to titled property such as real estate or automobiles.
In order for heirs to exchange inheritance property for cash advances they must adhere to protocol of probate law. If the state where inheritance property is held allows heirs to obtain probate cash they must first locate a funding source.
Funding sources assume substantial risk when using inheritance assets as collateral. Funding sources are the last creditor to be paid during estate settlement. Not only do funding sources have to wait for months before their money is returned, there is a chance they will not be repaid at all.
Probate can be complicated and require several months to settle estates. Many things can go wrong during the probate process. If heirs contest the Will, probate can be suspended for months and defense legal fees can bankrupt the estate.
It is not uncommon for estate executors to sell inheritance assets in order to pay estate debts and settlement costs. If the estate is financially incapable of paying back the probate loan, funding sources have no legal recourse.
Therefore, obtaining probate cash requires heirs to undergo investigation. Funding sources will require a copy of the decedent’s last will and testament and death certificate. Heirs undergo credit and background checks to determine if they have creditor judgments, tax liens, bankruptcy petitions, foreclosure, outstanding child support or alimony that could interfere with repayment of the probate loan.
If multiple heirs are entitled to inheritance property, but only one or two desire probate cash advance, each must agree to allow heirs to use the inheritance as collateral. Funding sources require written approval from each heir.
After funding sources confirm heirs are entitled to inheritance assets they require property appraisals to determine current market value. Funding sources do not pay full face value. Instead, they charge a fee which typically ranges between 10- and 40-percent of the value of assets used to secure the probate loan.
For example, if inheritance is worth $50,000 and the funding source charges 40-percent, heirs would receive a probate cash advance of $30,000. Heirs are required to assign inheritance rights to the funding source. Once probate settles, the estate repays the cash advance.
Probate cash can be a good alternative for heirs in dire need of funds. However, this option is costly. Prior to entering into this type of funding, heirs should explore alternative funding options such as taking out a personal loan or borrowing funds from relatives or friends.
Due to the complexities of probate, it is best to work with a probate lawyer to ensure proper protocol is followed.