Facing the death of someone you loved and cherished is never easy. Things can get even more complicated if they leave behind an estate that needs to go through a probate process first. If you’ve been named as an heir to such an inheritance, you may quickly find yourself overwhelmed by all the different possibilities as well as delays in the process of administering and closing the estate by the court.
Probate advances and probate loans are two common options you can consider if you want to “speed up” the probate process. They both can help the beneficiaries receive a chunk of their inheritance early, but none of them comes for free. That’s why you may want to learn more about each of them first to make more informed decisions down the road.
Here’s what you should know about probate advances and probate loans to determine whether they suit your needs:
What Is a Probate Advance?
Before you start researching what banks do inheritance loans or google a hundred similar questions, you first need to understand the difference between probate advances and probate loans. Luckily, it isn’t as complicated as it may seem.
A probate advance, also known as an inheritance advance, is a solution that usually promises an immediate cash payment from your inheritance. The exact numbers can vary depending on the specific case, but usually, it’s less than the total amount of money you’re entitled to. Don’t worry, though — the rest of your money won’t be going anywhere. You will simply receive it once the whole probate process closes.
Probate advance allows you to get the money much quicker than if you were to wait for six or even twelve months it can take to close the probate. All you need to do is get in contact with a lender and provide them with information about the estate you’re an heir to. Then, the lender will evaluate these details and determine whether they can make money by working with you.
In a nutshell, a probate advance can be an easy and convenient way to get cash fast, especially if you’ve got some necessary expenses that can’t wait for the next few months. However, their final cost may surprise you, as they may range from 10% to even 50% of the inheritance value, depending on the company you decide to work with.
What Is a Probate Loan?
A probate loan allows you to borrow money against the inheritance you will receive once the probate closes. It’s a hard money loan, secured by real property, and has to be repaid in monthly installments according to a strict schedule. Additionally, the payments need to include interest. Reliable lenders will use assets in your estate as collateral, but it all depends on the exact enterprise you decide to work with.
A probate loan works similarly to the “regular” loans you’re probably already familiar with. You need to find a lender, fill out an application, wait to get reviewed and approved for the loan, and then you can get some fast cash.
However, you need to remember that your credit score and monthly income will definitely be taken into consideration, and you’ll have to pay the monthly installments until the estate closes.
Probate loans can be used for anything, and no limits prevent you from spending the money as you wish (of course, as long as it’s legal). Just like probate advance, it’s a good option to get access to some of your money fast.
Still, you’ll need to be ready to pay high monthly repayments. It’s also essential to ensure that the lender you decide to work with doesn’t charge early repayment penalties, which could be the case if your probate closes in, for example, six months instead of the initially expected twelve.
Probate Advances vs. Probate Loans — Which One Should You Choose?
Probate advances and probate loans are one of the most common and arguably most accessible options you can settle for if you need access to your inheritance money before the probate process ends. Both alternatives come with their own benefits and disadvantages, which you should consider carefully before settling on one.
While it’s safe to say that most people choose probate advances due to a lack of interest, this doesn’t change the fact that a lender will still need to be involved in the whole process. This could cause some turmoil, particularly in a situation where you’re not the only heir to the estate in question.
You may want to opt for probate advance if you prefer to avoid the credit check and have just a single fee pulled once from the entire sum you’re about to inherit. However, if a credit check is not a concern for you and you’d rather pay in monthly installments, a probate loan may be a better choice.
In the end, it all depends on your personal needs and preferences. What works for one person in the complex world of probate law may not be suitable for someone else, so instead of basing your decision on other people’s experiences, evaluate what’s best for you.
The Bottom Line
As you can see, when dealing with inheritance, many different moving parts need careful consideration before you decide to settle for any of the possible options.
Fortunately, even if you don’t know a lot about the probate industry, you can review the information provided above and do some further research to get access to a portion of your inheritance in the most suitable way.
Both probate advance and probate loan will provide you with quick results, but you need to weigh their pros and cons first. Don’t rush this process, take your time researching different possibilities, and make the final choice with your financial health in mind. Good luck!
