Financial Questions: What Is A Loan On Inheritance?

Find out what an inheritance loan is and how to obtain one.

If you are an heir in a decedent's estate, you may be able to receive an advance on your inheritance before the probate closes. The following are some questions and answers that may help you to understand how an inheritance loan works.

Who can receive a loan on their inheritance and how long does this take?

An heir of a probate or beneficiary of a trust who is of legal age may apply for an inheritance loan that is going to be distributed within a certain time frame, usually within 3 years. Heir's can expect to receive their funds within 7 to 10 business days.

How do I make my monthly payments and what is the interest rate?

An inheritance loan is not exactly a loan; it is an advance on your inheritance. The money is paid directly to the lender out of the probate; therefore a monthly payment from the heir to the lending institution is usually not required. Before an advance is to be made, the lender will require a completed Heir's Information Summary along with copies of the probate documents. This will determine if you are approved for the advance on your inheritance. Instead of interest, the lender will most likely charge a one-time processing fee, which is deducted out of the cash advance. The amount of the fee is usually based upon the amount of the inheritance that is to be advanced.

How much of an advance can I receive from my inheritance?

There is a minimum distribution that an heir or beneficiary must receive in order to get an advance. This amount may range anywhere from $10,000 to an amount in the excess of $100,000. A lender most likely will not have a maximum advance limit.

Are there certain restrictions on how the money is spent?

There are no restrictions on how the money is spent, the advance on your inheritance is yours and you may spend it any way you would like.

Do I need to own real estate and have good credit in order to obtain an advance?

No. This money is your inheritance; the lender is just advancing you the funds until the money from the probate or trust is distributed. A lender may run a credit or criminal check; however a poor credit history normally does not affect the funding transaction.

Do I need to reside in the same state in which the probate has been filed in order to receive an advance on my inheritance?

It is not uncommon for an heir to live in a different state in which the probate was filed, so this should cause a problem for an heir to get an advance.

What if a claim is subsequently filed against the estate? Will I be required to pay the claim?

The lending institution is only allowed to advance the amount due to the heir. If for some reason a claim reduces the amount of the inheritance distributed by the probate, the bank would suffer the loss and the heir is under no obligation to pay for the loss unless it can be proven that the heir purposely failed to disclose the claim upon application.

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