The probate process can take many months or years to complete and delay the final distribution of Assets from a deceased person's Estate. This could be an issue if Surviving Family needs funds more quickly.
Probate loans are designed to help get a portion of an expected inheritance to beneficiaries immediately in exchange for the full inheritance when probate ends.
This type of advance on inheritance money may seem attractive, but its costs can be significant; probate loans often have higher interest rates and additional fees compared to traditional loans. Beneficiaries should carefully evaluate their financial situation and needs before considering a probate loan.
Key points to understand about probate loans include:
They are secured by the full inheritance: Probate loans are typically secured by the assets of the deceased's estate and the anticipated distribution to beneficiaries. The lender may require the beneficiary to assign their right to the inheritance or place a Lien on specific assets as Collateral.
They have strict repayment terms: Probate loans are typically repaid once the probate process is completed, and the beneficiary receives their share of the inheritance. The loan amount, plus interest and fees, is deducted from the inheritance payout.
They can have interest rates and fees: Probate loans often come with higher interest rates and fees compared to traditional loans. The interest rates can vary depending on factors such as the loan amount, duration, and the perceived risk associated with the estate.
They have eligibility requirements: The eligibility for a probate loan is based on the value and viability of the estate. Lenders will assess the potential inheritance and the likelihood of the probate process being completed successfully.
It's best to consult with a financial advisor or Estate Attorney to assess individual circumstances and make an informed decision before purchasing a probate loan.