When a loved passes away, there’s many things to attend to, such as contacting family and friends, making funeral arrangements and getting the deceased’s affairs in order. Unfortunately, these last two can be expensive. If you don’t have the means to cover the costs on your own, you may benefit from probate loans. This unique type of financing can help you bridge the gap between the funeral services and distribution of your inheritance.
What Is Probate?
Probate is the process by which a deceased person’s estate is settled. This involves several steps:
- Filing a petition
- Alerting heirs and creditors
- Making an inventory of the deceased’s assets
- Settling debts
- Paying taxes
Finally, inheritances are distributed according to the deceased’s will, if there is one. An executor, usually named in the will or appointed by the state, oversees this process to make sure the will is followed and all legal matters are settled.
Why Get a Probate Loan?
If you’re going to get funds eventually, why bother with a loan? The trouble is, probate is a long and complex process. Depending on which state you’re in, it can take anywhere from six months to two years. If there are any claims or legal cases involved or if the estate is large, it can take even longer.
That can put you in a bind if you’re responsible for making arrangements, want to buy out other heirs, need to preserve property tax or have estate obligations to settle. A probate loan lets you access your inheritance right when you need it.
How Does a Probate Loan Work?
You can think of a probate loan as tapping into your inheritance early; you get cash well before the estate is closed. Lenders are able to provide a portion of the amount you’re due to inherit, which you can then use immediately and for whatever purposes you choose. Financing applications are generally quick and easy to complete since approval doesn’t require looking at your personal credit history or assets. Instead, you’ll provide a copy of the will and other legal documents describing your inheritance.
Do You Have To Pay Back This Type of Loan?
Like other types of financing, you do have to pay back probate loans. You can make monthly payments, just like a mortgage, and are charged interest. Most financing in this category is short-term; repayment periods are generally one to five years.
What Happens at the End of the Probate Process?
Once all assets have been distributed and obligations settled, the executor submits the final documentation to the courts, who then decide whether or not to close the estate. This is when you as an heir can file an objection if you’re unsatisfied with how affairs were handled. If there are no objections, the estate is formally closed.
Is it getting a probate loan worth it? Every situation varies, but it can be a great option if probate is likely to be delayed or if you’re in dire need of funds to address estate-related matters. Losing a loved one is always difficult, but the resources this type of financing can offer may help you navigate those rough waters.