"Can an Estate Executor loan money to the estate?"?

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  • 1 month ago

    Whatever for?  I don't see any point in doing that or any need.  Why complicate things?

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  • 1 month ago

    Yes. However, the executor takes a risk in doing so. The loan cannot be repaid to the executor before certain estate debts are paid in full. To ensure being repaid, the executor will usually only make a loan when there is a short-term need for cash (to pay for those things that come first, such as burial/cremation costs, government taxes, debts owed by the deceased, and ongoing costs of real estate owned by the deceased).  When there are sufficient assets to leave the stated inheritance, but liquidating those assets takes time.

    When an executor of an estate with many non-liquid assets is strapped for cash, they can find themselves having to sell some of those assets at fire-sale prices to get a fast sale and fast cash. Making a loan to the estate makes sense in such a case.

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  • 1 month ago

    Yes he can.  Estates are often illiquid and this can solve a short term cash flow issue.  For example in the UK inheritance tax(IHT) has to be paid before the estate can come out of Probate.  It is therefore not uncommon for the executor to lend the estate the money to pay the IHT, complete Probate and then reimburse himself.

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    • Tavy; it is often the case that there are insufficient liquid assets to pay the IHT.  One of the beneficiaries can step forwards but, as you say, IHT can be thousands.  An executor who knows he can be repaid when (say) the house is sold solves the problem by lending and then reimbursing himself.

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  • Matt
    Lv 5
    1 month ago

    I would say no but I could be wrong

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