The timing of estate distribution and asset liquidation will not suit all beneficiaries at the same time, so how can IFAs support harmony being achieved so that the executor can continue to work in the interests of all parties and address the ‘IHT gap’?
The most practical solution is for IFAs to advise the use of a short-term loan; the flexibility of such loans allows them to be used for any purpose relative to the proportion or value of the estate in question. They can be utilised by beneficiaries that require early inheritance release and in cases of settling non-contentious disputes that may arise during the probate process, as well as by the executors to settle any IHT bills. Many traditional banks no longer operate in the inheritance advance market, the very few that do involve arduous, slow processes that come with a high-cost. Now IFAs can advise their clients that such a loan can be accessed through the use of dedicated probate finance lenders – they are equipped to offer simple solutions to such complex issues. These loans are secured either against the estate when the borrower is the executor, or the respective proportion of estates where the borrower is a beneficiary. In both scenarios, as the loan is repaid only following the Grant or Probate and the distribution of assets, there is no personal liability to the IFA’s respective clients.
There are other options to consider. For beneficiaries that wish to bide their time, an alternative option is to access their own funds to ‘buy-out’ other beneficiaries who want cash sooner, however it is unlikely that this is a realistic option for most HNW estates given the sums involved, and the likely IHT bill. Another method of gaining access to equity within property is by taking out a remortgage, but – as IFAs know – this method is lengthy and may subsequently result in premature redemption penalties and fees. This latter method could also force beneficiaries to compromise on property valuation as this will be dictated by the health of the market during the remortgage.
IFAs understand that HNW borrowers are often cash and time poor. HNW individuals facing disagreements with fellow beneficiaries, require straightforward solutions. The need to introduce their clients to a IHT and probate lending specialist has never been more appropriate and more timely.
