Inheriting a sizable estate can seem like a dream come true until it actually happens. Quite often, families of deceased individuals face challenges related to estate taxes and paying out heirs. Adding to the challenges is the fact that probate can be complex and time-consuming. If funds are needed quickly, the family may find itself financially strapped.
One possible solution is hard money.
Salt Lake City, Utah’s Actium Lending explains that hard money is typically reserved for things like real estate investments and business expansion. Yet private lenders are free to lend to whomever they choose. Some are willing to lend against a sizable estate in order to help families settle up quickly. Without access to hard money, families often turn to the only other alternative: a traditional mortgage.
Probate and Estate Liquidation
When a person dies, assets are distributed to heirs and other beneficiaries. Estate taxes are also collected. The process through which all this is done is known as probate. During probate, the estate’s administrators have a legal obligation to handle any remaining financial matters. Often, this includes:
- Paying off any debts the deceased left behind.
- Paying local, state, and federal estate taxes.
- Distributing the remaining assets according to the deceased’s will.
If the deceased did not have a will, assets are distributed according to state law. Needless to say that the absence of a will only makes settling an estate more complicated. Relying on state law rather than the known will of the deceased opens the door to all sorts of legal actions.
One way or another, probate can take months to complete. In the most extreme cases, it can take years. In the interim, debts still need to be settled and estate taxes still need to be paid. Therein lies the need to raise cash in a timely manner.
Settling with Traditional Financing
Mortgaging property included in an estate is a common strategy for raising cash. It is dependable, a known entity, and a practice with plenty of history behind it. But mortgaging also has drawbacks that can add to the emotional toll of trying to settle an estate:
- Lengthy Approval Times – It takes time to process and underwrite a traditional mortgage. When you are buying a house, you expect at least 90 days. But when attempting to settle an estate, the process could take 6 months or longer.
- Financial Obligations – Financial obligations play a key role in whether financing will be approved. If a lender perceives too much risk, any type of deal could be off the table. Meanwhile, those financial obligations still have to be met.
- Market Fluctuations – For every month settling an estate is delayed, market fluctuations can determine how assets are distributed. So it is in the best interest of an administrator to settle as quickly as possible. Traditional lending isn’t built to do that.
A traditional mortgage is a usable tool for facilitating probate and estate settlement. But in many cases, it’s not the best tool. Hard money is.
Why Hard Money Works Better
Actium Lending insists that a hard money loan is a better option because it offers:
- Immediate access to funds (usually within days)
- Loans tailored to the unique needs of each situation.
- Interest-only payments (in most cases)
The key aspect of hard money that makes it attractive during probate is its ability to accommodate even the most unique circumstances. Approval and loan offers are based on collateral value – the estate itself in a probate case. For families dealing with the loss of a loved one, it represents an easier way to get things settled as quickly as possible.
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