Why Is Probate Funding Needed?
Probate Funding is growing in importance due to the increasing percentage of the population (i.e. baby boomers) who die annually and have their Estates and/or Trusts go through probate administration. In theory, the process of distributing a Decedent’s estate should not be complicated. But in practice, administration is rarely quick and easy. Even simple or uncontested Probate administrations take no less than eight (8) months to a year to finalize, while the vast majority of administrations of Probate or Trust Estates take much longer.
Due to funding and short staffing issues, many Courts set hearings months out even on uncontested petitions. Quite often, because of questions relating to the admissibility of a Will, the location of intestate heirs, and/or questions regarding those who may be an interested party, it can take a year just to have someone appointed personal representative.[iii] Moreover, once a Personal Representative is appointed, notice is required to be given to creditors which affords creditors anywhere from four (4) months to one (1) year to file a claim, depending upon the jurisdiction. Then, there is the tedious process of locating and marshalling bank accounts and investments, cleaning up and disposing a lifetime of possessions and/or marketing the Decedent’s real property. Rarely are homes sold within a year, even under the best market conditions. Some properties are occupied by holdover tenants or relatives. Even after the property is liquidated, the process of closing an estate through an accounting, setting a hearing and obtaining Court approval, can take many additional months even if the accounting is uncontested.
Because of the inherent delays of administration, some heirs, who have pressing financial needs (i.e. debts, foreclosure, rent payments, et. al.), are relieved to know that there is a product provided by Probate Funding Companies which can solve their personal financial problems while probate is ongoing.[iv] Whether the purpose of the funds is to prevent foreclosure, pay rent, pay medical bills, pay household debts or pay for continuing education, it makes simple economic sense that individuals would choose to minimize their risks by obtaining an advance now by assigning a fraction of their future and undetermined interest in an estate, rather than waiting for months or years to receive a distribution.
This article was originally published here.