With the cost-of-living crisis causing financial hardship across the nation, waiting months for their inheritance is the last thing people need
Dicky Davies, Business Development Director and co-founder at Tower Street Finance, explains the role of probate lending in helping Beneficiaries access their inheritance quicker.
The cost-of-living crisis is well documented, and it is sure to occupy the minds of most consumers over the coming winter months. It is also widely predicted that the crisis will increase the levels of stress and financial hardship of many in the near future.
We know that as well as looking at ways to save money, many consumers will now be looking at increasing borrowings, using savings or other sources of funds to cope with the increased day to day costs they will inevitably be facing.
One of the most painful, unexpected financial burdens that can fall upon consumers are the sudden and additional expenses relating to the death of a loved one. In the current climate, this is even more stress-inducing.
Of course, the fact that a loved one has passed away is often very emotional and can also cause anxiety in any number of ways. If the Beneficiary is also the executor of the deceased’s will, they may have the added responsibility of managing the estate. This could find them needing to fund funeral expenses, inheritance tax, legal fees and any other testamentary expenses. It may also be that the relative was the major bread winner in the household and that will add to the financial pressures.
If someone found themselves in the position of being a Beneficiary and thought that this extra money would be available to spend quickly, they would be in for a disappointment as it is usually 9-12 months after the death before any funds are distributed from an Estate to the Beneficiary.
This was one of the reasons why we launched our probate lending solutions, and our Inheritance Advance product – it is not commonly known that the Probate and estate administration process can take so much time and there were no existing products on the market that enabled a Beneficiary to get access to their inheritance sooner, that did not involve some kind of increased personal liability.
We have helped out in many cases where the Beneficiary needed their inheritance sooner and they took out an Inheritance Advance to get much needed cash to enable them to fund their living costs.
We have also helped out in situations where the Executor has not been able to fund the costs of the funeral for a loved one, and they have taken out an Executor loan with us.
We know that Solicitors and probate administrators frequently get approached by Beneficiaries asking for updates on when they are going to get their inheritance, and the answer that they generally get is ‘when the Estate is finally distributed’.
We also know from our research that 50% of Beneficiaries would expect their Solicitor to let them know about financial products that could enable them to access their inheritance sooner.
Our Inheritance Advance product can therefore be a win: win, as it stops Beneficiaries chasing the Solicitor for updates on their inheritance and allows them to access much needed cash in their time of need.
Even if someone has the cash to cover unexpected funeral costs, or these have already been covered, in the current climate the majority of people are still going to want to access their inheritance as quickly as possible.
We surveyed over 2,000 people who were expecting to receive an inheritance and asked them what they will use it for. Around one in five (21%) planned to pay off their mortgage; 16% said they would use it to fund living costs in retirement; 11% would pay off a credit card; 8% would pay off a personal loan; and 7% would use it to pay living costs now.
Essentially, in many instances money received from an inheritance is rarely going into a bank account for a rainy day, and in particular during this challenging time, more and more people are likely to use it to simply get by and cover everyday expenses.
Only time will tell how long this cost-of-living crisis will play out for, but it is our hope that our Inheritance Advance and Executor Loan services can offer some relief and ease pressure points for both the Beneficiary and their solicitor in their time of need.
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