Inheritance loans are a cash advance provided in exchange for probated inheritance gifts. Probate is the process used to settle decedent estates. Under the best circumstances, probate settles in less than 6 months. If claims are made against the estate, probate can be prolonged several months or even years.

Inheritance loans are not actually loans. Instead, funding sources provide lump sum cash using probated property as collateral. Heirs assign property rights to cash advance providers who in turn submit a claim against the estate. Once probate settles, funding sources receive inheritance property used to secure funding.

Funding sources are private investors or cash advance companies that specialize in probate estates. Most inheritance lending providers require total asset value to be at least $15,000 before providing advanced funds.

Funding sources do not pay full appraised value for collateral property. Instead, they deduct a fee from inheritance loans which typically ranges between 10- and 40-percent of property value. For example, if heirs sell probated assets valued at $20,000 and the funding source charges a fee of 30-percent, the cash advance would amount to $14,000.

Funding sources assume considerable risk when providing cash advances for property suspended in probate. Many things can go wrong during the process that prevents cash advance providers from receiving secured property.

If decedent estates do not possess adequate funds to pay outstanding debts, the court can order valuable assets sold to cover debts. If heirs contest the Will, probate can be suspended for several months. When property is held for long periods of time there is high probability that assets will depreciate in value.

If the estate is ordered to sell assets used as collateral for advance funds, the funding source has no legal recourse. Due to the level of risk, funding sources require considerable documentation before offering inheritance money.

Heirs should be prepared to provide a copy of the last will and testament; death certificate; contact information for the estate executor; and current credit report. Funding sources need to determine if heirs have outstanding judgments or liens, or are engaged in situations that could prevent receiving collateral property.

Other forms that are often required when obtaining cash for inheritance include: Petition for Probate, and Inventory and Appraisement Statement. When real estate is used as collateral, the funding source usually requires a copy of the property deed.

Heirs involved in personal bankruptcy, or those owing past due taxes, child support, or spousal alimony often find it difficult to locate inheritance loans. When heirs have liens and judgments, creditors and government agencies can lay claim to inheritance gifts to satisfy debts owed.

Careful consideration should be given before transferring inheritance rights to a funding source. It is strongly recommended to conduct due diligence and investigate funding sources before entering into contract. Conduct online research, contact referrals provided by the funding source, and check with the Better Business Bureau to determine if complaints have been filed.

Although it can be difficult to wait for inheritance property held in probate, it is wise to carefully weigh the pros and cons of obtaining advanced funds. Those who opt for this type of funding should consult with 3 or more funding sources to obtain the best rate.

Take time to calculate the true cost of obtaining inheritance loans. If you\’re entitled to $100,000 and the funding source charges 30-percent, you will lose out on $30,000. Worse yet, you may be charged inheritance taxes against the full $100,000. Do you really want to toss away $30,000 to have cash-in-hand now?

There are situations where inheritance loans can be a saving grace. Just be certain to carefully assess options to make the best financial decision for your situation.

Author Bio: Simon Volkov is a California real estate investor who specializes in buying probated property. He has written extensively on estate planning strategies, pros and cons of inheritance loans, probate, and ways to avoid probate at www.SimonVolkov.com.

Category: Finances
Keywords: inheritance loans, cash for inheritance, inheritance money, probate, inheritance property, heirs