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Probate Funding: A Useful Option for So Many (Part 4 of 4)

The following is Part 4 of our 4-Part series on Probate Funding by Steven D. Schroeder, Esq., General Counsel/Sr. Vice President at Inheritance Funding Company, Inc. since 2004. Parts 1, 2 & 3 can be found here, here and here.

What are the Risks in Probate Funding?

Similar to California Probate Code 11604, (formerly Cal. Probate Code 1021.1), the Legislature, in enacting Probate Code 11604.5, has specifically indicated that Assignments relative to Probate Advances will not be set aside unless it is clear that the consideration paid is “grossly unreasonable”, at the time the transaction was executed. In fact, the Probate Court can presume the validity of an Assignment, in the absence of any objection raised or evidence submitted to the contrary. See Lynch v. Cox. (1978) 83 Cal. App. 3rd 296, 147 Cal. Rptr. 861.

However, nothing in the Probate Code Sections 11604 or 11604.5 indicates a legislative intent to modify the law concerning the evaluation date to be utilized in appraising the fairness of a contract. In interpreting statutes, courts are required to do so in a manner which will produce a reasonable and not an absurd result. See Freedland v. Greco (1955) 45 Cal. 2d 462, 289 P.2d 463. Thus, in the absence of any evidence that the consideration received by the Assignor was grossly unreasonable, at the time received, the Assignee should be presumed to have had the benefit of all the protection the law provides. See Boyd v. Baker (1979) 98 Cal. App. 3rd 125, 159 Cal. Rptr. 298, 304.

Moreover, given that the Probate Funding Company has no assurance of recovery at the time the Assignment is executed, nor any recourse against the Assignor/Heir, it is imperative that the Court consider the many risks a Probate Advance Company assumes during administration.    The following are just a few examples of those risks:

*Mismanagement or conversion of Estate funds by the Personal Representative;

*Unanticipated claims, such as Medical, Medicaid, Uninsured Medical Hospital or Nursing Bills;

*Litigation, including but not limited to Will Contests, Property Disputes, Reimbursement Claims;

*Inaction or Delays by the Personal Representative and/or Probate Attorney;

*Previously unknown will discovered, disinheriting the Assignor;

*Spousal/Domestic Partner Support Claims;

*Tax Liability/Litigation;

*Partnership Dissolution;

*Foreclosure of Estate property;

*Child Support Liens;

*Unusually high extraordinary personal representative and/or Attorney Fee Claims;

*Devaluation of Real Estate Market (i.e. 2008);

*Bankruptcy by an heir;

*Litigation against the heir.

Alienation:  An Heir’s Right.

Clearly, the Probate court has the jurisdiction to review an Assignment under Probate Code §11604.5 and consider whether the consideration paid was “grossly unreasonable” at the time it was executed. See Estate of Wright (2001) 90 Cal. App.4th 228, 108 Cal. Rptr. 2d 572.  Yet, it must be remembered that an heir’s right to alienate his/her interest is an important one and should not be infringed upon in a random or desultory manner. See Gold, et. Cal Civil Practice: Probate and Trust Proceedings (2005) §3:86, p. 3-78. Conditions restraining alienation, when repugnant to the interest created are void. See California Civil Code §711.

In this vein, Courts should also consider the fact that the lion’s share of heirs who have obtained probate advances have done so out of their own free will, without solicitation and/or direct marketing.[1] Many heirs who research probate advances find that it is a preferred option to loans or other sources of funding, which take substantial time to qualify, require credit checks and extensive documentation and create personal obligations. Therefore, as long as terms of the Assignment are simple, straightforward and unambiguous – and it appears on its face that the Heir was given full disclosure and consented to the transaction – Courts should be hesitant to interfere with the Heirs’ right of alienations.

Conclusion

It is intellectually dishonest to ignore the obvious legal distinctions between Probate Assignments and Loans. Probate Funding Companies like IFC provide a valuable option for many heirs who would not be able to qualify for a traditional loan and/or do not wish to personally obligate themselves. Probate Funding Companies assume a myriad of risks while administration is pending with no guaranty of absolute repayment. In California, the Legislature has enacted Probate Code Section 11604.5 which governs the transfer of a beneficial interest in the form of an Assignment, and clearly distinguishes these transactions from loans. Further, that section affords the Probate Court all the authority it needs to review Assignments and determine whether, at the time the Assignment was given, the consideration paid was grossly unreasonable. In reviewing its terms, Courts must always consider an Heir’s inherent right of alienability. If fair disclosure was given by the Probate Advance Company, and it is found that the heir understood and consented to the Assignment, the Court should be very cautious in modifying the terms of an Assignment, ex post facto.

In part 1 of this series, we cited just one case of many which demonstrates why Probate Funding is a useful option for so many heirs, and a far better option than a recourse loan.  In that case, Ms. Tanner would have likely lost her house to foreclosure if it was not for the availability of the Probate Advance provided by IFC. In hindsight, Helen Tanner made a very good deal for herself – even if she had the ability to qualify for a loan, the cost to her over such a protracted period would have been significantly greater. On the other hand, the return for IFC, some nine (9) years later, was considerably less than ideal.

That being said, the end-result in Tanner was far better for IFC than in the numerous other Estates in which it has incurred significant losses through the years. Heirs/beneficiaries are fortunate that there are Companies willing to take risk and pay heirs a sum of money for a fixed Assignment during Probate administration with zero personal recourse against the heir.

Steven D. Schroeder has been General Counsel/Sr. Vice President at Inheritance Funding Company, Inc. since 2004. Active Attorney in good standing, licensed to practice before all Courts in the State of California since 1985 and a Registered Attorney with the U.S. Patent and Trademark Office. 

[1] Over 90% of heirs seek funding through IFC’s website, by other heirs who have already contracted with IFC, by lawyers or personal representatives.

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Florida Funder Targeted by Class Action over Data Breach

By Harry Moran |

Whilst funders are often eager to support class actions on behalf of customers who have been harmed by cybersecurity attacks on other companies, a new complaint filed in Florida seeks to represent individuals who suffered losses because of a funder’s own data breach.

Reporting by Insurance Journal covers a class action that has been filed targeting litigation funder US Claims Capital over allegations that it failed to protect its clients’ personal data. The filing of the claim in the U.S. District Court in Miami follows a data breach in January of this year, with the plaintiff alleging that the funder had not implemented sufficient cybersecurity measures and therefore had not properly secured the personal data of the plaintiffs it had provided funding to.

The lead plaintiff in the lawsuit is a Kansas resident named as Timothy Vactor, with the complaint looking to represent other plaintiffs and clients of US Claims whose personal data was exposed as part of the cyberattack. The filing argued that due to the breach, the plaintiffs’ “private information is forever exposed and unsecure”, and that the “exposure of one’s private information to cybercriminals is a bell that cannot be un-rung”.

The funder had reportedly informed plaintiffs it had worked with of the data breach in a letter sent on April 11, over three months after the cyberattack on January 7. The letter informed US Claims’ clients that “certain information related to you may have been acquired by an unauthorized individual as part of the event”. The funder subsequently provided these individuals with an insurance policy in case they had suffered financial losses, as well as some assistance around identity theft protection and cyber monitoring.

At the time of reporting, US Claims has not filed a response to the complaint.

34% of Americans Trust ChatGPT Over Human Experts, But Not for Legal or Medical Advice

By Harry Moran |

A newly released study from Express Legal Funding, conducted with the help of SurveyMonkey, reveals that while 34% of Americans say they trust ChatGPT more than human experts, the majority still draw a hard line when it comes to using generative AI for serious matters like legal or medical advice. The findings highlight a growing national tension between fascination with artificial intelligence and fear of misusing it for high-stakes decisions.

Key Findings from the ChatGPT Trust Survey:

  • 60% of U.S. adults have used ChatGPT to seek advice or information—signaling widespread awareness and early adoption.
  • Of those who used it, 70% said the advice was helpful, suggesting that users generally find value in the chatbot's responses.
  • The most trusted use cases for ChatGPT are:
    • Career advice
    • Educational support
    • Product recommendations
  • The least trusted use cases are:
    • Legal advice
    • Medical advice
  • 34% of respondents say they trust ChatGPT more than a human expert in at least one area.
  • Despite its growing popularity, only 11.1% believe ChatGPT will improve their personal financial situation.
  • Younger adults (ages 18–29) and Android and iPhone users report significantly higher trust in ChatGPT compared to older generations and Desktop (Mac/Windows) users.
  • Older adults and high-income earners remain the most skeptical about ChatGPT's reliability and societal role.
  • When asked about the broader implications of AI, only 14.1% of respondents strongly agree that ChatGPT will benefit humanity.

Expert Insight:

"This study highlights how many Americans are navigating the fast-growing influence of generative AI and natural language processing agents in their daily lives and that ChatGPT is far from being just a fringe use tool," said Aaron Winston, PhD, Strategy Director at Express Legal Funding and lead author of the report. "Most people are open to using ChatGPT for advice—and over a third even say they trust it more than a human expert. But when it comes to high-stakes decisions involving legal, financial, or medical matters, most still prefer real-world professionals. It's a sign that while AI is gaining ground quickly, trust is still tied to context."

Why It Matters:

As AI tools like ChatGPT become more integrated into everyday life, understanding where people draw the line between curiosity and trust is critical. This distinction helps reveal not only how Americans are using AI today but also where they're still relying on human expertise for reassurance and accuracy.

About Express Legal Funding:

Express Legal Funding is a leading pre-settlement funding company headquartered in Plano, Texas, serving plaintiffs nationwide. Recognized for its commitment to ethical funding practices and consumer advocacy, the firm provides non-recourse financial support to individuals involved in personal injury and civil lawsuits—helping clients cover essential living expenses while their legal claims move forward. Beyond funding, Express Legal Funding is a trusted voice in the legal tech and finance space, publishing original research and data-driven insights that inform public discourse and guide industry best practices.

Legal-Bay Lawsuit Funder Launches Legal Funding Calculator for Consumers

By Harry Moran |

Legal Bay Presettlement Funding announces their new funding calculator for customers to compare pricing models of lawsuit loans between funding firms. It should be noted that Legal Bay doesn't charge compounding interest like many other legal funding companies, keeping payback costs lower right from the start. As one of the best lawsuit loan companies in the industry, Legal Bay ensures flat pricing, transparent contracts, and a helpful, knowledgeable staff to walk you through every step of the lawsuit loan funding process.

  1. Legal Bay is a direct funder—not a legal funding broker—which is the first distinction customers should make when researching legal funding options. Here's why:
  2. Being a direct funder allows Legal Bay to expedite cases faster, normally within 24-48 hours after applying, once all documents have been received.
  3. Being a direct funder allows Legal Bay to provide lawsuit loans with cap out provisions for cases that qualify without additional broker fees.
  4. Compound rates can grow substantially over the course of your case settlement funding, while flat interest stays the same at about 20% percent every 6 months.
  5. Legal Bay's lawsuit settlement programs are non-recourse which means the client will not have to pay back the loan if the case does not settle.

Chris Janish, CEO of Legal-Bay, commented, "Our funding calculator gives consumers an invaluable tool to compare payback costs. Plaintiffs will see that our direct funder platform means you deal directly with our staff and underwriters—not a broker. Our direct funding model allows for the fastest approvals, reduced rates, and no added broker fees, keeping your costs low. Legal-Bay's flat pricing—as opposed to compounding interest—and our best price guarantee ensures the lowest rates in the litigation finance industry. On large funding amounts, consumers should be aware of payback costs. The savings of Legal-Bay's flat-rate pricing versus contracts with compounding interest can be substantial."

Legal-Bay's funding model is designed to put more money back in the plaintiff's pocket at settlement. If you or a loved one need an immediate lawsuit loan in advance of your impending lawsuit settlement, please apply online HERE or call toll free at 877.571.0405 where agents are standing by.

Legal-Bay assists plaintiffs in all types of lawsuits, including commercial and mass tort litigation, personal injury cases, slip and fall accidents, property damage, car accidents, medical malpractice, wildfires, and many more. If you're looking for the lowest rates in legal funding, legal funding companies without broker, flat rate pricing or simple pricing legal funding companies, easy to use funding calculator, calculator for lawsuit loans, then Legal Bay is here to help.

Their loan for settlement funding programs are designed to provide immediate cash in advance of a plaintiff's anticipated monetary award. While it's common to refer to these legal funding requests as settlement loans, loans for settlements, law suit loans, loans for lawsuits, etc., the "lawsuit loan" funds are, in fact, non-recourse. That means there's no risk when it comes to loans in lawsuit settlements because there is no obligation to repay the money if the recipient loses their case. Therefore, terms like settlement loan, loans for lawsuit, loans on settlement, or lawsuit loan funds don't necessarily apply, as the "loan on lawsuit" isn't really a loan at all, but rather a stress-free cash advance.

For more information about lawsuit loans, please visit us HERE or call toll free at 877.571.0405 where a skilled agent can answer any questions you may have.