The probate process can be lengthy and complex, often extending from a few months to several years. During this period, the estate’s assets are inaccessible for transfer until the probate is completed. This can place significant financial strain on beneficiaries, particularly if they need to manage ongoing estate expenses or are considering a buyout of other heirs’ shares.

Below, we explain common scenarios where securing a probate loan may be crucial to navigate the probate process without unnecessary delays.

1. Property Tax Preservation

In California, Proposition 19 and Proposition 58 allow for what is known as the parent-child exclusion from reassessment, enabling the direct transfer of property from parent to child without reassessing the property value for tax purposes.

During probate, the transfer of property ownership to heirs can lead to a substantial increase in property taxes, as new property values are typically higher. However, securing a probate loan offers a financial strategy to manage this transition smoothly.

A probate loan provides assurance to executors and heirs that the estate has enough liquidity to maintain all expenses while still adhering to the legal timeline required to qualify for these tax exclusions.

2. Buyout Other Heirs

Often, multiple heirs have differing interests and financial needs which can lead to conflicts regarding the distribution of the estate. Some may wish to sell the property, while others might want to keep it within the family, either as an investment or for sentimental reasons.

A probate loan can provide immediate liquidity to those beneficiaries who prefer cash. Moreover, this can be particularly advantageous for those who wish to retain the property, as it enables them to acquire full ownership without the need to sell it under market pressure or at an inconvenient time.

A probate loan also speeds up the probate process by resolving potential disputes over how the property should be handled.

3. Settle Estate Obligations

Handling an estate often comes with a variety of financial obligations that extend beyond estate and property taxes, including debts left by the deceased, legal fees, property renovations and repairs and other administrative costs.

Handling these liabilities promptly is essential to avoid accruing interest, penalties, or legal complications that can further complicate the estate’s settlement. By providing the estate with immediate liquidity, a probate loan enables the executor to address all financial obligations.

This can be especially beneficial when the estate consists largely of illiquid assets such as real estate that cannot be quickly converted into cash without loss in value.

Securing a Probate Loan With HCS Equity

For beneficiaries, navigating the probate process requires not only patience but also financial planning. By securing funds through a probate loan, beneficiaries can manage estate expenses, buy out other heirs, and avoid property tax reassessment under Proposition 19/58.

Contact us today to your probate loan requirement and explore how we can help you preserve your estate.