Editor's choice: Inheritance Funding probate advances
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- No fees for probate delays
- Bad credit OK
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Probate can take months or even years to get through — but you can access your inheritance before the process is over by applying for an advance or by using your future inheritance as collateral on a loan. But you might want to treat this as a last resort. You could end up paying as much as 40% of your inheritance in fees.
Inheritance funding is a short-term form of financing that grants you access to the value of the funds or assets you’ve inherited quickly. Inheritance loans, inheritance advances, estate loans and probate advances are the most common ways that companies refer to inheritance funding, and the terms are often used interchangeably.
There’s really two types of inheritance funding: an advance on your inheritance and a loan using your inheritance as collateral. Neither consider your credit when you apply, and you can’t find these options with a traditional lender.
Also called probate advances, these are the most common type of inheritance financing. You often transfer your right to your inheritance in exchange for a fee, rather than interest — though in some cases, interest factors in as well.
Because you’re not actually taking out a loan, you don’t need to worry about repayments or needing strong credit to qualify.
Sometimes called inheritance loans or probate loans, estate loans allow you to borrow against real estate assets that you don’t yet have access to. You receive your funds and repay it plus interest and fees, with your estate considered collateral for the loan.
However, not all “estate loans” work this way — sometimes lenders use this term to refer to an advance. Make sure you understand how your lender works before applying.
There are several legitimate reasons for wanting to get an advance or loan backed by your inheritance:
Chances are, you’re going through an emotionally tough time. Consult with experts, friends and family to make sure you’re making the right decision for your situation.
The most common way to get inheritance financing is through an inheritance advance company. These companies buy your inheritance directly from you in exchange for a fee.
They don’t consider your credit history when you apply, and you can get your funds within a few days. But these companies can be expensive, charging fees equivalent to those you’ll find with a high-interest loan.
You can get other forms of inheritance financing through hard money lenders. These short-term lenders provide loans backed by property. Like inheritance advance companies, hard money lenders don’t consider your credit score.
This option, too, can be expensive, with APRs often higher than other subprime loans. If you’re unable to repay your loan, your lender seizes your estate assets and sells it.
Applying for inheritance financing is more involved than other types of loans. There’s a lot you need to do before you can even start looking at lenders. Typically, you’ll follow these steps:
Typically lenders ask for:
What happens next depends on the type of financing you got.
If you got an inheritance advance, there’s little else you need to do if the rights to the inheritance have already been transferred over.
With an estate loan, however, you make monthly repayments until your loan’s principal and interest are paid off. Keep an eye on your loan’s balance and try not to miss any repayments — these loans tend to come with high interest rates that can add up quickly.
Inheritances involve two types of taxes: estate tax and inheritance tax. Estate tax is paid from the estate of the deceased before you get your funds. Inheritance tax is what you pay after you receive your inheritance.
Only a few states charge inheritance tax, including Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. This tax can range from 1% to 20% of your inheritance’s worth, depending on how much you receive and your state’s laws. Often close relatives like spouses and dependents are exempt from paying an inheritance tax.
Make sure you’re aware of your state’s inheritance tax laws before applying for inheritance financing to know just how much you’re eligible to receive.
Depending on your needs, you might find alternatives that are a lot less expensive than inheritance financing.
Getting an unexpected sum of money or asset might make you feel as if you’ve won the lottery. But if you act wisely, you might be able turn your inheritance into income and savings that can benefit you for years to come.
Inheritance financing is an expensive option worth treating as a last resort. Before you apply for an inheritance loan, make sure you understand your legal obligations and what your assets are really worth — after taxes.
You might want to look into other financing options like personal loans to find the best choice for your circumstances.
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