Inheritance funding is a relatively new method of receiving your portion of a probated will before the process is completed. This really needs to be thought of as a loan against a will. Once the probated will is settled, the inheritance funding company receives back the dollar amount owed, plus a fee for fronting the money.
Since this is a fairly new, and also unknown way of avoiding the probate waiting period. There are a number of issues that a person must be aware of before signing a contract with a probate company. As with any legal document, it is wise to have your attorney review the document before signing.
The first thing you must do is determine if you really need an inheritance advance, or can wait for the will to settle. A probate company will get you funds much faster than a traditional lender, but the final cost will be considerably greater than the interest on a standard loan. You pay for the speed and convenience. Most financial advisors would try to steer you towards a lending institution because of the costs involved with these probate firms.
If you do decide to proceed, it is very important to make sure the agreement states the funding group will receive their reimbursement from the will and not from their client. This is a huge distinction because if the will is settled for less than the amount owed the probate company, they must absorb the loss. If the contract stipulates that the heir is responsible for reimbursement, the firm may go after the client for all expenses, including fees. The verbiage must state that the probate finance company must give the money to the heir “without recourse.” If the contract states that the heir was provided monies “with recourse,” the funding company may legally go after the client.
As always, carefully read any contract, and seek legal advice.