Yes, an executor can take out a loan on behalf of the estate, but only when the loan is being put towards the estate’s interests, not their own.

An executor is the named person in a will responsible for managing a person’s estate. Their responsibilities include tracking down assets, settling debts, managing the payment of Inheritance Tax (IHT), getting probate granted and distributing inheritances to beneficiaries. 

In short, being an executor is a significant responsibility, particularly when it comes to the finances of an estate. 

The biggest challenge most executors face is paying off Inheritance Tax within six months of the date of death. 

This is due to the fact that estates often have cash tied up in assets, and these assets can’t be sold until probate has been granted. 

Figuring out how to administer the estate while facing this kind of financial pressure can be a heavy weight for executors to bear. 

The good news is executors can take a loan out on behalf of the estate, with specialist products like Provira’s Estate Advance specifically designed for this situation.

By taking out our loan, executors can access up to 50% of the net value of the estate within days, cover their urgent expenses, and focus on moving the probate process forwards.

What’s more, executors are not personally liable and we help to keep costs low by only charging simple interest, not compound interest, not charging early repayment fees and not asking for monthly repayments. 

The loan is simply repaid in full once the estate has been settled. 

For more information, reach out to our team today.

What is an executor loan?

An executor loan, or Estate Advance, is a specialist financial product that offers a percentage of the net estate value for the executor to use to cover urgent estate expenses.

These generally include Inheritance Tax bills, funeral costs, property renovations or legal fees. 

As Inheritance Tax is often the biggest financial pressure an estate faces, this type of loan is also known as an Inheritance Tax loan.

An executor can take out a loan on behalf of the estate through a specialist UK provider like Provira. 

A key advantage to using a specialist provider for an executor loan is that they’re secured against the value of the estate, not the executor. This means the executor is in no way personally liable for the loan.

Banks on the other hand often secure the loan against personal assets such as property or credit history.

However, with a specialist executor loan, an executor can’t use the loan for personal reasons or make financial decisions that could potentially affect beneficiaries in any way.

Read more about how our Estate Advance could work for you, here

Why would an executor need to take out a loan on behalf of the estate?

An executor often needs to take out a loan on behalf of the estate because they need to cover Inheritance Tax (IHT) within the six month deadline. 

For estates that are valued high and contain multiple properties, their value will sit largely in assets, not cash, meaning executors are more likely to be faced with a high IHT bill and no funds to cover it. 

Even if an executor wanted to sell property in order to free up some cash, this isn’t an option as assets can’t be sold before probate is granted. 

And with the new IHT reforms introduced this year cutting relief for Agricultural and Business Property Relief, it’s going to become more common for estates to find themselves in this position. 

Without taking out a loan, executors risk facing compound interest charges from HMRC at 7.75% per annum, and other possible penalties. 

This is why our Estate Advance offers a simple financial solution for executors facing this challenge.

Read more about how our Estate Advance could work for you, here

How is an executor loan different from a personal loan?

An executor loan, or Estate Advance, is secured against the value of the estate, with no personal liability for the executor. 

A personal loan, on the other hand, is secured entirely against the executors personal assets or credit. 

As an executor you can get a loan on behalf of the estate in different ways:

From a bank

You can apply for a loan on behalf of the estate at a bank. The difference is that they’re likely to offer you a loan that’s much more risky as you are putting your own personal financial situation on the line.

From a specialist lender 

Alternatively, taking out a loan with a specialist provider, such as Provira, protects the executor from any personal liability. This is because it’s secured entirely against the estate. 

Because it’s tied to the estate, the loan can only be put towards legitimate estate expenses, not personal financial obligations. 

When you take out a loan with Provira, there are also no credit checks, no monthly repayments, you’re only charged simple interest, not compound interest, and the total loan is repaid directly from the estate when funds are released. 

What if the estate can’t pay the loan back in full?

If you take out a specialist Estate Advance with a provider like Provira, you don’t have to worry. 

The advantage of taking out a loan on behalf of the estate with us is that, as an executor, you’re in no way personally liable if there ends up being a difference in the estate’s predicted value and the final outcome.

If an executor were to take out a personal bridging loan with a different lender, chances are they would be responsible for the difference.

It’s important to note that executors should still communicate with beneficiaries if they take out a loan as interest charges may end up reducing the value of the estate, and therefore the amount that is then left to be distributed as inheritance. 

You can rest assured, when you take out our loan, you will have a member of our supportive team dedicated to guiding you through the ins and outs of the process, every step of the way 

We:

• Give you access to up to 50% of the net value of the estate almost immediately
• Only charge simple interest, not compound interest, saving you money in the long run
• Don’t charge early repayment fees if everything wraps up sooner than expected
• Don’t ask for monthly instalments. The loan is repaid in full once the estate is settled
• Don’t need credit checks or personal collateral

Speak with our team about an Estate Advance by filling out our form today.

What is the interest rate for an executor’s loan?

At Provira, we charge 1.5-2% monthly interest for as long as the advance is outstanding. We never charge interest past the 30-month mark. There is also a 1-2% arrangement fee which is added to the loan, meaning you pay nothing upfront.

We’re also unique in offering a simple interest rate, not compound interest rate. This means you don’t pay interest on top of interest, keeping your costs low. 

Here’s an example of how it works: 

• Receiving an advance of £50,000
• 2% arrangement fee: £1,000
• 12 month loan @ 2% = 24% fixed interest rate
• Total interest accrued over 12 months = £12,240
• The total cost to be repaid = £63,240

In this scenario, by charging simple interest not compound interest, the estate is saved £1,440.

Plus, if the estate were to wrap up probate and release funds in 10 months, instead of 12, the two remaining months of interest would simply be written off.

How Provira can help with an executor loan

Being an executor of an estate comes with its own unique financial pressures. 

From sourcing funds and meeting a pressing Inheritance Tax deadline to covering other urgent expenses, it can put a lot of weight on your shoulders.

This, coupled with recent changes to how IHT is structured, means taking out a loan on behalf of the estate is sometimes a necessary tool to keep the probate process moving. 

And, luckily, Provira’s Estate Advance provides an answer.

Our loan allows executors to borrow up to 50% of the net value of the estate almost immediately, meaning any urgent expenses can be paid off straight away.

Our Estate Advance is:

• Efficient. You’ll receive your money within just a few days.

• Straight-forward. We only charge simple interest, not compound interest. 

• Stress-free. We don’t ask for monthly repayments or early repayment fees, and work directly with solicitors to pay HMRC and organise our repayment once the estate has been settled. 

Ready to get started? Fill out our form today. It takes just a few minutes.