Loans to Estates in Probate
Managing probate estates can be problematic for several reasons, many of which are caused by lack of liquidity in the estate. Our private loans help solve myriad estate issues and provide flexibility for the administrator in order to carry out the deceased person’s wishes, assist each beneficiary in receiving their share of the inheritance without being forced to part with valuable family property, and allow heirs to maximize the value of their inheritance.
- Many probate estates have limited liquidity, meaning that all, or a majority of, the probate estate consists of non-cash assets. Without sufficient liquidity to probate the estate, valuable estate assets might have to be sold, simply to ensure that the probate process is carried out properly and fairly. Sale of the estate assets means that heirs will not be able to inherit property which may have significant monetary and sentimental value. Also, selling an asset rather than allowing heirs to inherit the asset may cause valuable income tax and property tax benefits to be wasted.
- Estates also need sufficient liquidity to ensure that the probate estate makes its way through the court system. Since no disbursement of funds or assets may be made without the court’s order, an administrator needs access to funds in order to pay monthly bills, pay for funeral and medical expenses for the deceased, and pay fees associated with the probate court proceedings—such as filing fees, publication fees, and probate referee fees, to name a few.
- We assist administrators, attorneys, fiduciaries and court appointed trustees with capital needs such as property maintenance, eviction of tenants, debt service, medical expenses, administrative expenses, attorney’s fees, taxes, judgments, and to cover ongoing carrying costs.
Additional benefits include:
- Competitive rates and terms
- No personal guarantee required
- Interest only payments
- No prepay penalties
- No minimum months of interest
- Funds are typically available within 7-10 business days
Private Loan Process
Determine who will retain property
Oftentimes one or more beneficiary wishes to retain the property and it’s tax base
Determine loan amount
The property value, other assets/cash in the trust, and the number of beneficiaries are used to determine the liquidity needs of the trust
HCS Equity provides a loan to the trust
HCS Equity provides private capital directly to the trust to create liquidity needed for equalization, a necessary step to avoid reassessment under Proposition 58.
Equalization and distribution
Cash or property are distributed as mutually agreed upon by the beneficiaries
Change of ownership
Change of ownership and exclusion from reassessment are filed
Trust loan is repaid
The beneficiary retaining the property either repays the trust loan with their own funds, or secures conventional financing to repay the trust loan
*This is for illustrative purposes only, HCS Equity does not provide legal advice or services