Funding of inheritance refers to a strategy used by the heirs entitled to inheritance property which is carried out in a probate court. A succession is required to liquidate the inheritances of the deceased. The process can take several months; causing the depreciation of inheritance assets. When the deceased have outstanding debts, there is the possibility that necessary to sell assets to cover expenses.
Heirs who choose to raise funds inheritance must find a funding source that specializes in this field. The most common sources of financing include private investors and cash advance companies. In rare cases, banks or credit unions make advance loans. However, when the heirs are entitled to titled property, such as real estate or motor vehicles, banks can allow the heirs to use the property as collateral and take out a secured loan.
The heirs must act with due diligence to make sure you are working with a funding source reputable. The heirs must give inheritance rights to the investor in exchange for a lump sum cash. The heirs are not obliged to repay the advance. Instead, the investor receives assets used to secure the advance once the succession is settled.
Private investors take substantial risk by raising cash for probate loans. Besides having to wait for complete legalization, also they face the real possibility that equity is forced to sell assets to cover outstanding debts. Investors have no legal recourse to pursue the estate if they cannot collect the advance. Nor they can pursue heirs unless it is proved that wrong information was provided for the advance.
The process for obtaining cash for probate loans can vary. Most funding sources require heirs to undergo a background and credit check to determine if the applicant has outstanding debts that could interfere with payment. Funding sources should determine whether the heirs have tax ties, creditor judgments, bankruptcy proceedings or pending child support or spousal alimony.
Funding sources generally require a copy of the last will and testament and death certificate of the deceased. Funding sources contact the estate administrator to verify ownership of the estate. In some cases, they will also require property appraisals to determine fair market value.
Estate financing is generally offered to heirs entitled to $ 15,000 or more. Funding sources charge an upfront fee that is deducted from the cash advance. Fees generally range from 10 to 40 percent of anticipated funds. Heirs should research multiple funding sources to get the lowest rate.
If the heirs apply for a cash advance of $ 10,000 and funding sources charge 40 percent, the amount of funds received would be $ 6,000. However, the heirs assign inheritance rights totaling $ 10,000.
The heirs must determine the true cost of obtaining cash advances. The heirs not only give up a percentage of the anticipated inheritance, but also they could impose an inheritance tax for the full amount. It is advisable to consult a probate lawyer or tax accountant to determine if funding of inheritance is a smart financial choice.