If you are expecting to receive an inheritance from the estate of a loved one but that money has to go through probate, you may want to seek an advance from the estate. To do this, you’ll need to take out a probate loan.
A probate loan is an immediate payment made to you. The lender obtains your inheritance once probate ends. This is a good way to get the money you need now, but if you want to do this, use caution.
What is a probate loan, and how does it work?
A probate loan is a loan that allows you to take out your inheritance before it completes the probate process. There are reasons to do this, such as needing money to pay for the funeral or to cover your own financial needs.
With a probate loan, the one thing you should know is that you will most likely receive an immediate payment in exchange for the full inheritance upon the completion of probate. The lender may offer you $10,000 out of $13,000 that you stood to inherit. You’ll get the immediate payment, but they’ll get the entire inheritance when it pays out.
Before you do this, it’s smart to look into the legal obligations you have. You also need to fully understand what you stand to inherit. The professionals you work with can help you understand if you will receive all of the assets you expect or if there is a risk that some could be lost in probate due to debts or other issues.
If you are not the executor, you will need to reach out to the executor for help getting the documentation you need to seek the loan. You should also get multiple offers before accepting one because you will not be getting the full amount of the inheritance regardless of who you select. Opt for the lender who takes the least money.
Alternative options may be better for those who need money but who stand to inherit much more if they don’t use a probate loan. Probate loans have high interest rates, and some lenders are predatory. Be cautious if you want to consider them.