Probate Funding CriteriaAs Baby Boomers increasingly age and pass away, the need for probate funding advances (also known as inheritance funding advances) also increases. It goes like this: the greater the number of deaths, the greater the number of estates which will go through probate; the greater the need for inheritance advances.
Most persons are not familiar with the probate process, much less probate funding process. Oftentimes, probate can be lengthy, drawn out process. When this occurs, some heirs, especially ones who are not financially well-off, will require an amount of cash to cover their living expenses while the estate goes through the probate process. This is where inheritance funding advances come in. Typically, an inheritance funding company will advance the heir a certain amount of money against his or her expected portion of the estate. The heir then becomes a client of the inheritance funding company. When the estate is settled, the funding company will recoup the inheritance advance, in addition to a small fee from the proceeds of their client’s portion of the estate.
Probate funding is a relatively unknown cash flow method. There are a number of companies on and off the Internet that provide inheritance funding advances. It is vitally important that an heir who, at that critical time after the death of a loved one or someone critical in their lives, have a means of determining which probate funding company best suits his or her needs. A set of criteria for heirs to use doing this emotionally charged time is critical. One must remember that all inheritance funding companies are different: they all have different funding maximums and minimums; they have different policies with respect to pulling credit reports; some may have application fees, while others don’t; etc. We, at learn-about-cash-flow.com, have assembled a short list of questions to ask and points to consider when seeking a reputable probate funding company. Please understand: This is only a guide. You must follow your own intuition, heart and, if you have it, legal advice to determine the best inheritance funding company to suit your needs. Here goes:
1. First, ensure that you truly need an inheritance funding advance. a. Recommendation: you should seek an inheritance funding advance to satisfy NEEDS, NOT WANTS. b. If you can obtain funding from a traditional source (bank, credit union, loan company, etc.), do so prior to requesting a probate funding advance. c. From our Probate Funding Webpage, you learned that an inheritance advance is relatively expensive when compared to traditional funding sources such as banks and loan companies.
2. Ensure that the inheritance funding company is a solid business entity. a. Does it have a physical address, as well as an Internet address? b. Do they provide you multiple, legitimate phone numbers? c. Have they been in business at least five (5) years? d. Can they show you a solid track record of providing inheritance advances? e. Is there someone they will assign to you to personally handle your request?
3. Ensure the inheritance funding company charges no application fee. a. Legitimate inheritance funding companies do not charge application fees b. There are too many legitimate companies offering probate advances to settle for one which charges additional fees. Additionally, probate funding is expensive enough already. Why add any additional fees when there is no need to do so?
4. Ensure the inheritance funding company makes an advance and not a loan. a. If the inheritance funding company provides an advance, then they will recoup their money from the distribution of the estate, not directly from the heir. This distinction is important because should the amount the heir is expected to receive when the final distribution is made is reduced below the amount of the advance, the probate funding company absorbs the loss. On the other hand, should the heir accept a loan, and the same situation occurs, the probate company may look for the heir to pay back the full amount of the loan out of pocket. Therefore, to avoid the possibility of this predicament, it is best that the heir receive an advance, not a loan.
5. Ensure that any money received from the inheritance funding company is made “without recourse”. a. This simply means that the heir does not have to pay that money back out of pocket should the heir’s portion of the estate is smaller than the advance. Example: If the heir’s portion is expected to be $50,000, and the heir receives $25,000 as an advance, however, due to unforeseen claims against the estate, to include the appearance of several other, here-to-fore unknown heirs, the client heir’s final distribution is reduced to only $20,000, that client heir does not have to pay back the $25,000 advance. The probate funding company absorbs the loss. b. If the heir was provided a loan “with recourse”, then the client heir would have to make good on the $25,000.
6. No monthly payments should be required to repay the advance. a. If a company requires monthly payments be made to repay the advance, run, don’t walk, away from that company. b. True inheritance funding companies will recoup their advance from the heirs portion of the final distribution.
7. An inheritance company should not pull a credit report to check the heir’s creditworthiness in order to make an advance. a. If an inheritance company pulls a credit report to check the heir’s creditworthiness, then the heir should run, not walk, away from that company. b. Having said that, you should not be afraid if an inheritance funding company pulls your credit report to determine that there are no judgments, child support or bankruptcy proceedings that might interfere with repayment of the advance. This is a smart thing for the probate funding company to do. They want to ensure that no one else has an established claim against the heir’s portion of the estate.
8. Ensure the probate funding company is not looking for you to repay the advance should the distribution of the estate be delayed. a. For true probate funding companies, they will wait until the estate has been distributed before seeking repayment. They will receive repayment from this final distribution. If assets from the estate are expected to be distributed at a certain time period, and that distribution is the late, they should not look to you for repayment. If any company should suggest this scenario for repayment, run, don’t walk, away from that company.
9. Ensure that there are no geographic limitations on the probate company's funding operations. a. Most strong, reputable inheritance funding companies will be able to make advances on probate in all 50 states from their current business location. Should a company state some reservations about making a probate advance in any of the 50 states, take this as a clear indication that something is wrong. Again, run; don’t walk, away from that company. There are too many strong probate funding companies in existence to take a chance on one which may not be.
10. Listen very carefully for the company’s criteria for making an advance. a. There are three consistent criteria for making an advance: 1) the size of the requested advance; 2) the complexity of the probate estate; and 3) the estimated time to final distribution of the estate’s assets. You should be wary of any company which cites criteria above and beyond these three.
Again, view the criteria listed aboved as suggestions. Please seek legal advice about inheritance funding, as appropriate.
Are You Looking For A Probate Advance?Are you an heir seeking an inheritance advance or probate advance? Are you a relative or friend of an heir who is seeking a probate advance? Or are you an attorney trying to assist a client in obtaining an inheritance advance? Are you unsure of what to do next? Confused? Need help? Then, you have come to the right place. At learn-about-cash-flow.com, we are here to provide you the help and guidance you need. What's your next step? Simply, fill out the form below. We will ensure that a representative from a learn-about-cash-flow.com-verified probate funding company contacts you within 48 business hours.
Probate Funding Request Form Page Additional Inheritance Funding InformationCommon probate and inheritance funding terms and definitions are located here. Probate Funding Frequently Asked Questions are here. Subscribe to the
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