Authors

David Horton

Borrowing in the Shadow of Death: Another Look at Probate Lending

Abstract

“Fringe” lending has long been controversial. Three decades ago, demand for subprime credit soared, and businesses started to offer high-interest rate cash advances, such as tax refund anticipation loans, payday loans, and pension loans. These products have sparked intense debate and are subject to a maze of rules.

However, in Probate Lending, published in the Yale Law Journal, a coauthor and I examined a form of fringe lending that has gone largely unnoticed: firms that pay lump sums in return for an heir or beneficiary’s interest in a pending decedent’s estate. Capitalizing on a California law that requires companies to file these contracts in probate court, we analyzed seventy-seven loans that stemmed from deaths in 2007.

In this companion Article, I report the results of a study of two additional twenty-two months of probate records. My research provides hard evidence about the multimillion dollar inheritance-buying industry, including the prevalence of loans, characteristics of borrowers, how often lenders are repaid, and annual interest rates. I then use this data to compare probate lending to other species of fringe lending and to outline how courts and lawmakers should regulate the practice.

Repository Citation

David Horton, Borrowing in the Shadow of Death: Another Look at Probate Lending, 59 Wm. & Mary L. Rev. 2447 (2018), https://scholarship.law.wm.edu/wmlr/vol59/iss6/4