Due to the COVID-19 pandemic, unemployment rates in Maryland are at an all-time high which leaves many Maryland residents looking for ways to improve their cash flow. For those who are due an inheritance following the death of a loved one, it is possible to apply for an inheritance loan to receive cash to provide support and maintenance.
The probate process following someone's death can become quite lengthy depending on various factors. Many Maryland probate courts are still catching up from the time of the shutdown which means there are many administrative delays involved, more so than a typical year. The probate process requires the executor to inventory all of the estate property, notify creditors, pay all appropriate estate debts and then distribute the remaining assets to the rightful beneficiaries. It is most common for the process to take 6 to 12 months, yet it is not uncommon for it to take years to file the final inventory and close the estate in probate court.
Some beneficiaries may be anxious to receive the funds due to them from the loved one’s estate and therefore they seek out a lending institution that will provide an inheritance loan. The lender will evaluate the estate and determine how much the applicant stands to inherit. The terms of the inheritance loan will vary as well as the structure of the loan. The lender may charge a flat fee or a fixed interest rate. The applicant then assigns all rights to the inheritance over to the lender.
This allows the beneficiary to receive a portion of the inheritance quickly and up front without incurring any monthly payments. The executor of the estate will pay the lender directly from the estate account just as any other beneficiary. The other benefits of an inheritance loan are that it does not impact your credit score and there should be no late fees or other hidden costs associated with it.
The downside of an inheritance loan is that if the probate process winds up more quickly than you anticipated you may regret giving a portion to the lender rather than waiting and getting the full amount owed to you. The other drawback is that the terms of the inheritance loan could range from 10% to more than 50% of the inheritance value.
When considering an inheritance loan, seek advice from an experienced estate administration or probate attorney prior to finalizing your loan application. At Stouffer Legal, we will be happy to go through the terms and discuss your options. Contact us for a consultation.
