Financing options
Other Probate Financing Options
Different financial tools serve different needs during probate. Beyond probate advances, executors and heirs may consider executor loans, litigation finance when an estate dispute is in play, purchasing estate assets, or buying fractional interests in inherited property. Here is how these options work.
Executor Loans
Executor loans are loans made to the executor or administrator of an estate to cover estate expenses before distribution. These can include taxes, maintenance, debts, and other costs that must be paid while probate is ongoing. The loan keeps the estate solvent and allows administration to proceed without depleting liquid assets.
When they are used: Executors often turn to executor loans when the estate has significant real property or illiquid assets but limited cash to pay bills, taxes, or creditor claims. The loan is typically repaid from estate proceeds once assets are sold or distributed.
Pros
Keeps the estate solvent and allows administration to continue. Can prevent forced sales or delays while waiting for asset liquidation.
Cons
Usually requires creditworthiness of the executor or estate. Interest accrues over time. Repayment is tied to estate resolution.
Typical use cases: Paying estate taxes, covering mortgage or property maintenance during probate, satisfying creditor claims, or funding legal and administrative costs when cash flow is tight.
Litigation finance
Litigation finance (third-party litigation funding) is capital provided to pursue or defend a legal claim—here, often a beneficiary or creditor litigating in or against an estate—in exchange for an agreed share of any monetary recovery. Industry messaging often highlights outcome-linked or non-recourse structures, risk sharing, and better access to justice when one side would otherwise be outspent or forced to settle early. It is distinct from a probate advance on an undisputed inheritance distribution.
Typical probate-related contexts include will contests, fiduciary breach claims, beneficiary or heirship disputes, and creditor claim litigation. Funders usually work alongside licensed counsel after diligence on merits, budget, and recovery theory. Eligibility and terms depend on the individual matter.
Purchasing Estate Assets
Buyers can acquire real property or other assets directly from an estate during probate. The estate sells the asset to the buyer, and the proceeds are used to pay debts, taxes, and distributions to heirs. Court approval is usually required for significant asset sales to ensure the transaction is fair and in the best interest of the estate.
Benefits for heirs: A sale can speed up liquidation when heirs prefer cash over holding real estate or other illiquid assets. It can also simplify administration when the estate needs to satisfy creditors or distribute proceeds.
Considerations: Sales must comply with probate court rules and often require notice to heirs and creditors. The timing depends on court approval and the executor's ability to complete the transaction.
Buying Fractional Interests in Inherited Property
This option involves purchasing a partial ownership interest from one heir in inherited property. It is common in multi-heir situations where real estate is shared among several beneficiaries. One heir may want cash now rather than waiting for a full sale or distribution.
How it works: A buyer acquires the heir's fractional share (e.g., one-third or one-half) at an agreed price. The heir receives cash immediately. The buyer becomes a co-owner with the remaining heirs and may eventually buy them out, sell the property, or hold the interest for appreciation.
Benefits and risks
The heir gets cash now without waiting for a full sale. The buyer may enter at a below-market price because fractional interests are often discounted. Risks include co-ownership complexity, potential disputes with other heirs, and the difficulty of selling a fractional interest later.
Not sure which option fits your situation?
Every estate is different. Our team can help you understand which financing approach makes the most sense for your circumstances.