Inheritance
FAQs
Long
delays, uncertainties, legal hassles. Too often these are the problems you
inherit when a loved one, friend or relative dies. Because a typical estate can
easily be tied up in court proceedings (called probate) for a year or more, there's
no way of knowing when you'll actually receive your inheritance money.
An
inheritance cash advance helps you overcome delays that are likely through the
probate process.
You
get part of your inheritance now, instead of waiting months, or even years!
- There's
no concern about credit references or current employment.
- You
have no personal liability.
- There
are no monthly payments or hidden charges.
- Your
income or credit status isn't a problem.
- You'll
get fast, courteous and friendly help and one click gets you started!
We
work with several funding companies and have provided you with some of their most
frequently asked questions. If you have any additional questions, please feel
free to contact us directly.
Do
I have to wait for probate to close?
Get
the money you need now. If you are an heir to an estate that is currently in probate
or a beneficiary of a trust due to make distribution(s) within three years, we
can help you get your future inheritance today.
Unlike
a bank or financial institution that lends you money based on your credit history,
it is often possible to advance a portion of your future inheritance now. There's
no waiting months or even years for probate to close, you get the money you need
when you need it.
The
funding source will recover their investment directly from the probate or trust.
The heir normally has no obligation to repay the funding source.
Here's
How it Works
One of our brokerage partners will advance cash to heirs who
are inheriting through an estate or trust. You will be paid immediately based
on a portion of your future inheritance. It's an excellent opportunity to get
you the cash you have locked-up in probate and use it now.
Usually,
you just need to fill out a short form, often known as the Heir's Information
Summary. Then, send the completed form to the funding source, together with copies
of personal identification and relevant probate or trust documents, to the extent
you have them available.
Who
is eligible to receive a cash advance?
An heir who will be inheriting at
least $17,000 from a probate which is already open or is currently being opened;
or a beneficiary of a trust who will be receiving at least $17,000 in distribution(s)
from the trust within three years. The trust instrument must not limit the beneficiary's
right to assign an interest in future trust distributions (a so-called "spendthrift
clause").
Do
I have to make monthly payments?
You make no monthly payments and your
credit status is not a problem. You get the cash now, and we wait for probate
to distribute. When probate finally closes, the funding source will receive their
agreed upon amount and you receive the balance. It's that simple.
How
quickly can I gain access to funds?
The entire process is very fast. Once
the funding source receives your information, they can normally issue a check
directly to you in just a matter of days.
Who
is eligible to receive cash?
An heir who will be inheriting at least $15,000
from a probate which is already open or is currently being opened; or a beneficiary
of a trust who will be receiving at least $15,000 in distribution(s) from the
trust within three years.
Are
there any geographic limitations on funding?
No. There are no restrictions
on where our funding sources can do business. Though most of the business is done
in the United States, we do have some funding sources that can fund out of country.
Is
the heir charged a fee for providing funding?
Yes, fees will range depending
on the funding source and are usually less than $500. This processing fee is usually
deducted from the cash advance. Other than this one-time fee and the costs for
out-of-pocket expenses, like overnight delivery service or cashier's check fees
which are also deducted from the advance, there are typically no other fees or
charges prior to providing funding to the heir.
Are
there any application fees?
No. Fees are charged only for funded deals,
and are deducted from the advance.
Do
you run a credit check on the heir?
In general, it is not necessary for
an heir to have good credit to receive an advance. However, in certain circumstances,
a funding source may run a credit check as part of the underwriting process. A
poor credit record including delinquencies, bankruptcies, foreclosures, etc.,
will not affect the pricing and normally does not have an influence on funding
a transaction.
The
funding source obtains a credit report in preparing a case for funding, primarily
to determine that there are no judgments, child support or bankruptcy proceedings
that might interfere with payment of the assignment. A poor credit record alone,
including delinquencies, discharges in bankruptcy, foreclosures, etc., will generally
not prevent an heir or beneficiary from receiving an advance.
What
are the criteria that determine the cost of an advance?
The size of the
advance and the estimated time to distribution are the major factors affecting
pricing. Larger transactions, generally speaking, are less expensive than smaller
transactions.
Are
there minimums and maximums for cash advanced to an heir or trust beneficiary?
Minimums
and maximums may vary. Some funding sources will advance as little as $5,000.
Essentially, there are no upper limits to the amount to be advanced. As a general
rule of thumb, assume the advance cannot exceed 30% of an heir's expected distribution
from an estate or trust.
What
does the funding source receive in return for the cash advance?
In return
for a present cash payment from the funding source, the heir or beneficiary sells
to (technically, "assigns to") the funding source the right to receive
a fixed amount of money out of the heir or beneficiary's share of the estate or
trust.
When
does the funding source get paid?
The funding source is paid directly
from the estate or trust upon distribution. Funds not needed to satisfy the assignment
are distributed directly to the heir or beneficiary.
What if there are insufficient funds in the estate or trust to pay the funding
source?
This is one of the risks the funding source assumes when it accepts
an assignment from an heir or trust beneficiary. The heir or beneficiary who gives
true information on the application and honors the assignment agreement has no
personal liability for payment of the advance.
What
happens if a previously unknown creditor makes a claim on the estate?
This is one of the ways a trust or estate may end up with insufficient funds to
pay the funding source in full, and it is a risk the funding source assumes. The
funding source can only receive those distributions from the probate or trust
that are due to the heir or beneficiary. Medical claims arising from the last
illness are a major concern. The funding source absorbs the loss and has no recourse
to the heir—unless the heir or beneficiary was aware of the claim(s) and
failed to tell the funding source about it in the application process.
Can
an heir qualify for an advance even if there is no will?
If a person passes
away and does not leave a will, then that person’s estate is said to be intestate.
Every state in the US has different laws governing an intestate estate. The only
way to be certain that an heir is inheriting from an intestate estate is to contact
the estate attorney and determine what portion, if any, they are entitled to under
the law of the state where the decedent resided.
Are
there any restrictions on obtaining a cash advance on my trust?
Many trusts
contain a clause that is referred to as a “spendthrift provision.” This
clause protects you, as a beneficiary, from having creditors attach themselves
to your share of the trust. Unfortunately, the clause also prohibits you from
voluntarily assigning your interest to a third party which is exactly how the
funding source is able to provide cash advances on trusts. We are more than happy
to review your trust to determine if it contains a spendthrift provision. If you
wish to review it yourself, you should look for a section that contains anything
similar to the following:
Spendthrift
Provision
"No interest of any beneficiary in the principal or
income of any Trust created under this instrument shall be transferable by voluntary
assignment, anticipated, assigned, alienated, encumbered, or hypothecated, and,
to the extent permissible by law, shall be free from execution, attachment, bankruptcy
and other procedures for the satisfaction of creditors’ claims or be subject
to legal process before actual receipt by the beneficiary.”
Understanding
the Time Value of Money
Sometimes, there is confusion surrounding the amounts
paid to sellers for their future cash payments. Many Sellers initially think that
our prices amount to only pennies on the dollar. This is simply untrue.
Part
of the money you are getting in the future is interest that hasn't been earned
yet. On a structured settlement annuity, for example, the insurance company is
simply paying you the interest on the money they invested when you settled your
case. The "amount" of the settlement (i.e.. The sum of all the future
payments) includes a great deal of interest that hasn't been earned yet. Take
the example of a United States Government bond:
As
of August, 1998, a $100,000 zero coupon (pays zero interest) United States Treasury
Bond due August 20, 2017 was worth $31,780, less than one third of it's nominal
or face value.
Is
the US Government getting ripped off in a highly competitive global free market?
The
answer is obviously no.
The
simple fact of the matter is the promise to pay $100,000 (or any amount) in the
future is not worth that amount today. The further in the future it is due, the
less it is worth today.
It's
the same as with lottery prizes.
Many state lotteries now offer a lump
sum option instead of the traditional 20 - 25 year annuity payout. However, as
we all know, when you elect to receive a lump sum you typically receive about
one half of the advertised prize amount. In fact, what the lottery commissions
do is identical to a structured settlement. An annuity or U.S. Treasury bonds
are purchased to fund the future payments due to the winner.
Attached
is a copy of the State of New Jersey's lump sum formula and a thorough description
of the California Annuity Prize Payment Procedure from the California Lottery.
Both demonstrate that the actual value (the present value) of the stated jackpot
is really about half that amount and both states allow people who have elected
to receive an annuity to change their minds and sell some or all of their future
payments to a Lottery/Settlement Purchasing Company.
Settlement
purchases are similar to mortgages.
When one borrows money for a home mortgage
the bank gives you - say $100,000. But if you add up the payments you make back
to the bank they total 250,000 - 300,000 (depending on interest rates and terms).
In essence, settlement purchasers do exactly the same thing only we take the risk
if the insurance company goes bankrupt - you owe us nothing. Also, since these
transactions are not loans they don't affect your ability to borrow from other
sources.
Still
not convinced? Consider the following:
It is an axiom that the further
in the future a you are expecting to receive a sum of money, the less it is worth
today, in part because of inflation. Inflation will make the value of the payments
shrink in coming years.
By
converting future payments into a lump sum, an individual gains a potent weapon
in fighting inflation. The following illustrates the effects of inflation and
the power of compounding:
A
lump sum grows in value.
The
Rule of 72 states that an investment at a particular interest rate will double
in a certain number of years. You can easily determine how quickly your investments
will double simply by dividing 72 by the interest rate that you anticipate receiving
in a given investment. For example, an investment that will yield 10% per year
will double approximately every 7.2 years (72/10 = 7.2). A 12% yield would mean
your investment doubles every 6 years. Below is a chart with the Rule of 72 applied
to a $15,000 investment at various interest rates over the course of a number
of years. This gives you some idea of how much a lump sum today can be worth in
the future.
Future
value of a $15,000.00 investment.
| Interest
Rate* |
Value
after 10 yrs |
Value
after 15 yrs |
Value
after 20 yrs |
| 12% |
$49,505 |
$89,937 |
$163,388 |
| 14% |
$60,337 |
$121,012 |
$242,704 |
| 16% |
$73,514 |
$162,746 |
$360,288 |
| *
Assumes monthly compounding. |
Future
payments aren't worth as much as you think.
Inflation
is like a cancer eating away at the value of your money. The further in the future
you are to receive a sum of money the less it is worth today because of, at least
in part, inflation. Thus, no matter what the source, structured settlement payments,
lottery prize or other type of annuity, inflation will make the value of the payments
shrink in coming years.
Just
look at what inflation has done over the past 34 years:
| 1964
Average Prices: |
| Salary |
$6,080.00 |
| New
House |
$13,050.00 |
| New
Car |
$3,496.00 |
| Loaf
of Bread: |
$
0.21 |
| Gallon
of Gas |
$
0.30 |
| Ounce
of Gold |
$35.00 |
Imagine
how little that "huge" $100,000.00 payment due in January 2021 will
be able to buy at that time!
|
|
