Navigating inheritance lending can feel overwhelming, especially with so many industry-specific terms. Whether you’re exploring your options, applying for funds, or simply trying to understand the process, having a clear understanding of the terminology can make all the difference.
This glossary breaks down the most common terms you’ll encounter in inheritance lending, probate, and estate funding. Use this as your go-to guide to confidently manage your inheritance lending experience.
Essential Terms in Inheritance Lending
Inheritance Advance
An advance refers to funds provided upfront by an inheritance lender based on your future inheritance. Unlike a loan, you typically do not need to repay the advance if the estate fails to settle as expected.
Example: If you know you’re inheriting $50,000 but need immediate access to cash, an inheritance advance can provide you a portion of the funds now.
Beneficiary
A beneficiary is a person named in a will or trust to receive assets, property, or money.
Importance: Being the named beneficiary is a key factor in qualifying for inheritance funding, as lenders base approval on your rightful claim to the estate.
Collateral
Collateral typically refers to an asset used to secure a loan. However, in the context of inheritance lending, the lender usually relies on your future inheritance as the form of collateral.
Distribution
The division or payout of assets to heirs or beneficiaries as specified in a will or by state probate laws.
Example: After the probate process is complete, beneficiaries receive their share of the estate as part of the distribution process.
Executor
An executor is the person named in a deceased person’s will to carry out the instructions in that will and manage the estate.
Why It Matters: Probate advance providers often communicate with the executor to confirm inheritance details when evaluating applications.
Funding Agreement
A written contract outlining the terms of an inheritance advance or loan. It will specify key details such as the funding amount, fees, and repayment obligations.
Pro Tip: Always read the funding agreement carefully and ask questions about any unclear terms before signing.
Heir
An heir is someone legally entitled to inherit from a deceased person’s estate, even if they are not explicitly named in a will.
Example: Children typically qualify as heirs under laws of intestate succession if there is no will.
Inheritance Advance
An advance provides a portion of your expected inheritance as immediate funds. There are no monthly repayments, as the inheritance lender recovers the advance directly from the estate once it settles.
Main Benefit: This is a faster option compared to traditional loans since it eliminates the waiting period associated with probate.
Inheritance Loan
An inheritance loan, unlike an advance, functions like a traditional loan and requires repayment from the borrower. These loans may or may not involve interest based on the lender’s terms.
Key Difference from Advance: Unlike advances, a loan must be repaid even if the estate settles for less than anticipated.
Intestate
If someone dies intestate, it means they passed away without leaving a valid will. The estate will be distributed according to state law rather than individual wishes.
Impact on Lending: Intestate estates often complicate inheritance lending by creating uncertainty around asset ownership.
Probate
Probate refers to the judicial process where a will is validated, debts are paid, and assets are distributed to beneficiaries.
Typical Timeline: Probate can last anywhere from several months to over a year, which is why many people turn to inheritance lending for immediate financial relief.
Probate Advance
A synonym for an inheritance advance, this term highlights the use of funds during the probate process rather than waiting for final settlement.
Probate Court
The legal authority overseeing the administration of wills, estates, and inheritance disputes.
Why You Should Know: Probate courts often govern the timeline and accessibility of your inheritance.
Successor
A successor is someone who inherits assets in place of a beneficiary, such as when the original beneficiary passes away.
Trust
A trust is a legal arrangement where assets are held by a trustee on behalf of beneficiaries according to specific terms laid out by the trust creator.
Trustee
The person or entity responsible for managing a trust’s assets and ensuring compliance with the trust’s terms.
Example: A bank or trusted family member may serve as the trustee for a trust left to minors.
Will
A legal document outlining a person’s wishes for the distribution of their estate after their death.
Probate Connection: The will is often subject to probate validation before any inheritance can be distributed.
Financial Concepts Related to Inheritance Lending
Fair Market Value (FMV)
The reasonable price an asset would sell for on the open market. Lenders may consider FMV when determining the amount of inheritance funding you qualify for.
Net Proceeds
The final amount of money distributed to a beneficiary after deducting all taxes, debts, and liens. This is key to understanding how much of your inheritance you’ll actually receive.
Underwriting
The process inheritance lenders use to assess the risk of providing you with funding. This typically involves reviewing details like the size of the estate, potential debts, and your share as a beneficiary.
Final Thoughts
Understanding these terms puts you in a stronger position to make informed decisions about inheritance lending. Whether you’re seeking an inheritance advance or navigating probate, using this glossary as a reference will help you confidently manage the process.
If you’re ready to explore inheritance funding solutions or have more questions, visit InheritanceLender.com to find active inheritance lenders in your state.