A probate administration expense loan covers the cash flow gap between when estate expenses come due and when the estate actually has money to pay them. The estate borrows against its real property, pays the necessary costs to keep the administration moving, and repays the loan when the property sells or is distributed.
This page is for informational purposes only
It does not constitute legal or financial advice. Please consult a qualified California probate attorney before making any decisions about estate financing.
Expenses We Cover
We fund loans to cover any legitimate administration expense recognized under California probate law, including:
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Attorney fees
California probate attorney fees are set by statute and can be substantial. On a $1,500,000 estate, the statutory fee for the attorney is roughly $25,000, with additional extraordinary fees for contested matters. A probate expense loan can pay attorney fees as they come due so the estate does not stall.
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Court filing fees and costs
Filing fees, publication costs for the Notice to Creditors, and other court-mandated costs are due upfront and cannot be deferred.
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Probate Referee appraisal
California requires a Probate Referee to value all estate assets other than cash. The Referee's fee is a statutory percentage of the appraised value, typically 0.1% of the total. On a $1,200,000 estate, that is $1,200 for the Referee alone, plus any fees paid to appraisers the Referee uses.
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Property taxes and insurance
Property taxes continue accruing during probate. Insurance must remain active. On an estate that takes 18 months, these carrying costs add up quickly.
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Utilities and maintenance
A vacant property still needs basic maintenance to prevent deterioration that would affect the eventual sale price. Utilities, lawn care, and minor upkeep can all be covered.
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Creditor claims and executor compensation
Approved creditor claims must be paid before final distribution. California law also allows the personal representative to receive statutory compensation from the estate. A loan can provide funds to pay both without waiting for the estate to close.
How Repayment From the Estate Works
The key feature of a probate administration expense loan is that the personal representative is not personally responsible for repayment from their own assets. The loan is an obligation of the estate, secured by the estate's interest in the real property.
When the property eventually sells or is distributed, the loan is repaid from the proceeds as part of the closing. If the property is distributed to a beneficiary who plans to keep it, that beneficiary will need to refinance the probate loan into their own conventional financing after they hold clear title.
This structure protects personal representatives from cash flow risk. Many executors and administrators currently pay estate expenses out of pocket and wait for reimbursement at the close of the estate. This practice is common but also a significant personal financial burden, particularly for estates that take 18 months or more. A probate expense loan eliminates the need for the personal representative to serve as an unofficial bank for the estate.
You should not have to front this money personally
The estate is the borrower. Your personal assets are not collateral. When the property sells or is distributed, the loan is repaid from the estate proceeds.
Rate Range and Fee Schedule
| Item | Range |
|---|---|
| Interest rate (per year) | 9.5% – 10.95% |
| Origination points | 1.25 – 1.95 points |
| Appraisal (in-house BPO) | No charge |
| Lender document fee | No charge |
| Prepayment penalty | None |
| Minimum loan amount | $30,000 |
Timeline
If Letters have not yet been issued, you can start the conversation with us before the court appointment. We can review the application and get everything staged so we can fund quickly once the Letters are in hand.
Documentation Required
- Letters Testamentary or Letters of Administration issued by the Superior Court. We need current Letters, not expired ones.
- Property information: Address, tax bill, any existing mortgages or liens.
- Estimate of administration expenses: A general accounting of what the loan proceeds will be used for. This does not need to be a formal budget.
- Identification: Government-issued photo ID for the personal representative.
- Recent title work or prior title policy, if available: Not required, but helpful.
Frequently Asked Questions
Does the loan require court approval?
It depends on whether the estate is administered under the Independent Administration of Estates Act (IAEA). Most California probate estates operate under IAEA authority, which gives the personal representative authority to borrow against estate property with beneficiary notice rather than court approval. If the estate does not have IAEA authority, court approval may be required, which can add six to ten weeks. Your attorney will know which situation applies.
What if the estate's only asset is the real property?
That is the most common scenario for this type of loan. The loan is underwritten on the value of the real property, not on the estate's liquid assets. No cash in the estate is not a problem.
Can the personal representative be reimbursed for expenses already paid out of pocket?
Yes. If the personal representative has already advanced funds for estate expenses, a probate loan can reimburse those advances at closing, provided the advances are properly documented.
What if the property is underwater or has significant debt against it?
If existing liens are close to or exceed the appraised value, there may not be enough equity to support an additional loan. We will assess this during underwriting and give you a straightforward answer.
How does this affect the beneficiaries' eventual distribution?
The loan plus accrued interest is repaid from the estate proceeds at close. Beneficiaries receive their shares of whatever net proceeds remain. The alternative, no loan and no money to pay administration expenses, often results in delayed distributions and out-of-pocket costs for the personal representative. Most beneficiaries prefer the loan structure once they understand it.
Stop Paying Estate Expenses Out of Your Own Pocket
If you are an executor or administrator dealing with estate expenses and no liquid cash to pay them, we can help. Call us or submit an inquiry and we will let you know quickly whether a probate administration expense loan is the right tool.
Call 760-722-2991