Probate can be a long, drawn-out process, especially if the estate has to file a federal income tax return and wait for a return letter from the Internal Revenue Service approving the close of the estate. What happens if you cannot wait that long for access to your inheritance? For some, their inheritance is needed to provide basic necessities and to contribute to basic living expenses. Others need inheritance money to maintain estate assets. In these situations, you may be able to get an advance on your inheritance in the form of an inheritance loan.
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Compare how much you need to how much you stand to inherit and decide if borrowing against your inheritance amount is really worth the interest and tax consequences. Consult the estate's personal representative or a tax lawyer for guidance on tax consequences and recommendations for lenders that specialize in inheritance loans in your state.
Contact inheritance lenders that operate in your state and ask for details about their standard terms. Pay special attention to the interest rates each charges. Choose a lender you're comfortable with, preferably the one that charges the least amount of interest.
Gather the lender's required documentation as proof of your inheritance. This may include a copy of the will, an official death certificate, copies of the letters of administration issued by the probate court officially opening the probate proceeding and appointing the personal representative, a certification of the amount of your inheritance from the personal administrator and your identification.
Fill out the loan application, which includes an assignment of the rights to the amount of your inheritance plus the lender's fee. Submit it with any required supporting paperwork and wait for your answer.
Tips & Warnings
Expect the lender to file a claim with the estate based on the assignment of inheritance rights you executed as part of the loan paperwork. Repayment is made directly from the estate to the lender upon close of probate.
References & Resources
- Articlesbase.com: What Is an Inheritance Loan and How Can I Use It?
- CloseProbate.com: How to Borrow on an Inheritance
- The Law Office of William M. Yates: Is an Inheritance Loan Worth It?
- Simon Volkov: Inheritance Loans Need to Have Realestate as Collateral
- Heir Advance: Secure Inheritance Loans for Heirs in the USA and Canada
- Stockbyte/Stockbyte/Getty Images