While many people will go through the process of receiving an inheritance in their lives, not everyone is aware that they can borrow against any inheritance that includes real estate to increase their liquidity in the present. While inheritance loans aren’t right for everyone, depending on your financial situation, you may be able to take advantage of this financial tool to put yourself in a better position for the future. If you aren’t familiar with the benefits associated with an inheritance loan (also referred to as an estate loan, probate loan, or trust loan), let’s go over three legitimate reasons to use one.
1. Addressing Current Financial Needs
Many heirs have pressing financial needs that cannot be postponed until the full value of their inheritance is received. Whether it’s high-interest debt, medical costs, or just monthly bills, many heirs find it more useful to have access to liquid assets immediately when deciding what to do with an estate. Taking out an inheritance loan makes it easy to cover your current financial obligations and use the assets you’re entitled to at the time when you need them most.
2. Cover Costs and Obligations of the Estate
You may not realize it, but the probate process is often long and drawn out. Sometimes it can even be years before an estate is fully resolved. There are a lot of costs that you’ll be responsible for during this process, and not everyone is in a position financially to be able to cover them. These expenses include things like legal fees, funeral costs, maintaining properties, or settling debts related to the estate. A short-term inheritance loan provides the liquidity to address these issues without requiring the heirs to find a solution on their own.
3. Dividing an Inheritance Between Heirs
If an estate has multiple heirs, dividing it up can get complicated. One person may want to keep a real estate property that is due to be inherited, while another may prefer to just have cash. Often, siblings choose to use an estate loan buyout, where the heir would take out an inheritance loan, retain the property, and use the loan to pay the other heir or heirs for their share in the estate. If the assets in the inheritance aren’t large enough to split and a beneficiary doesn’t have the cash on hand to directly buy out another heir, a probate loan is a great way to make sure the property doesn’t have to be sold just to distribute assets equally.
Inheritance loans aren’t right for everyone, but if you find yourself in need of liquidity, they might be the answer you’re looking for in a time of financial need. In the state of California, Prop 58 allows the limitation on yearly increases in property tax assessment for inherited properties granted by Prop 13 to be passed from parent to child. If you’re interested in inheritance loans California, do your research and get in touch with your financial advisor to see if they could be a viable way to attain liquidity for you.
Now, more than ever, many Americans are strapped for cash and going through uncertain times. If you find yourself in a position where you have an inheritance involving a real estate property coming your way, it’s worth looking into what your options are for accessing those assets immediately, as opposed to waiting years for the probate process to play out. Since the estate will pay the lender the inheritance amount directly, there’s also no monthly payment, no credit inquiry, and you won’t be responsible for a myriad of hidden fees that often come with a traditional bank loan.