What is Probate?
Probate is a legal process in America to distribute the assets of an estate after the owner dies. A personal representative or executor is appointed to handle the tasks associated with probate. In many cases, it must be approved by the local court before any funds can be distributed to the living heirs. There are several inheritance process steps to take.
Probate includes publishing a notice for all interested parties, paying creditors, filing tax returns and other statements, and determining market worth of all assets with an appraisal for real property, including real estate and any commercial property in the owner’s name. The executor may need to appear before the court multiple times during this period and meet other obligations. The deceased may have even owned a small business that must be liquidated or assigned to a new owner or investors or accounts https://paydayloanstennessee.com/cities/livingston/ in which they were investing.
How long does probate take can be a complicated topic. This probate hearing process can range from a few months to years. Everything must be completed before the court will approve the distribution of the remaining assets to the heirs. This may be a long time to wait for money that technically belongs to you.
Even if the deceased had a will for their estate, it can be months or possibly even years for the process to be completed. If one of the heirs disputes the will, the court will need to determine the validity of their claim. Creditors may come in and claim debts that the executor must repay. All of these situations and others can delay the process and expand the timeline before compensation may be made to the heirs.
If you are the personal representative of the estate, you may find you need available cash to do your job. You may need the money to take care of the non-cashassets, keep the business running or to pay certain fees until the inheritance is released. If you don’t have enough cash flow on hand, you may need to find a source to borrow it. While you can get small business administration loans for a business, it is often not an option when the business is in probate. Yet, you need cash to gain more revenue unless the business closes.
If you were the caregiver of the deceased until their death, you may have incurred expenses that must now be paid from your budget. Many family members take care of elderly parents or others at a cost to themselves. Funds from an inheritance can help you recover those kind of losses to your finances. You may think of an estate loan as a way to help you out until the estate is settled. However, a loan is not always as simple to obtain as you might expect.
Can You Borrow Money from an Estate?
Since the money from the estate isn’t yours yet, you will have a difficult time borrowing money from it. You can try to get a loan, but most banks won’t lend money on collateral that isn’t in your name. For instance, you wouldn’t be able to get a real estate loan on a house in the estate because you don’t have the title in your name. Real estate loans are generally made using the title as collateral. You have no equity in the house because it doesn’t belong to you until probate is closed.
You could get a personal loan or borrow against your retirement, but in each of these situations, you couldn’t use the estate as collateral. Another option is to find hard money lenders who will provide an estate loan. They are also known as probate loans or an estate loan. They provide money based on your inheritance. You may be required to make monthly payments until probate is closed, but you will have the money while it’s in process.