How to Borrow Money Against a Shared Inheritance
Category: Personal Finance
Due to the length of the legal process sometimes involved in inheritance, heirs may have to wait months or even years to receive their inheritance distributions. Inheritance loans and cash advances allow heirs to receive funds in a matter of days and have no effect on other estate heirs. In exchange for the loan, the cash advance company is assigned a portion of the estate.
Determine whether or not you are eligible for an inheritance cash advance. Heirs can typically only receive advances from probate assets. Probate assets are real estate, bank accounts, company interests, insurance policies and other assets that were solely owned by the decedent. Non-probate assets include retirement accounts, trusts, or any accounts held jointly with another person.
Determine how much money you want to borrow from your shared inheritance. Inheritance advances and loans usually range from $5,000 to $250,000. Choose a loan amount that is less than your expected inheritance. Some lenders cap the amount of the loan at a certain percentage of your total expected inheritance.
Contact a company specializing in inheritance cash advances after the estate opens. Banks and credit unions generally do not provide loans on inheritances. Inheritors can only borrow money from their inheritance after the executor has begun the probate process. Ask the inheritance company what fees they will charge for an inheritance advance. The fees vary by company and usually depend on the complexity of the estate, the amount of the advance and the amount of time until the estate closes.
Arrange a cash advance from the lender. Companies can generally distribute funds from loans and advances within a few business days of the transaction. Ask the company about any consequences if there are not sufficient funds to pay the loan. Since the heir is assigning an interest to the company, the heir usually does not have personal liability for insufficient estate funds.
Pay back the inheritance cash advance company as soon as possible. As part of the transaction, inheritance cash advance companies are automatically paid by the executor when the estate closes. However, some companies offer rebates and discounts for heirs that pay back the loan early.