An inheritance cash advance, also known as an estate advance or inheritance advance, can help you and your family access funds from an inheritance right away. Learn more about how an inheritance advance can potentially help you after a loved one passes away.
What Is an Inheritance Advance?
If you're wondering what is an advance, it's basically a portion of cash that’s paid to you before you directly receive the money - think of it like a cash advance on your paycheck.
As the name suggests, estate advances or inheritance advance loans are just an advance you get that’s determined based on how much you’ll receive from your inheritance. When obtaining an inheritance advance, you’ll need to pay the company that gives you the advance a fee that comes directly out of your inheritance.
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Why Get an Inheritance Advance?
Going through probate can be an extremely long process, especially if the total inheritance goes over the amount some states allow to skip the probate process. For instance, in California, as of 2021, inheritors can avoid the probate process altogether, or go through a streamlined version of it, if the inheritance is under $166,250. However, many times assets will exceed this amount, causing inheritors to go through the probate process for, on average, a year and a half.
The timeliness of probate is a major reason why getting an inheritance advance might be beneficial for heirs who need to access their funds right away. Inheritance advance companies typically take about a week to dispense the funds. It can be a good option for estates that don't have real estate or for heirs who are strapped for cash, need to pay back loans or need to pay bills immediately.
How Does an Inheritance Advance Work?
Those interested in getting an inheritance advance should simply reach out to a company that specializes in them. The company will determine the amount the inheritor is entitled to and if the person requesting the advance is truly an heir of the estate.
To start the process, you’ll need to fill out an application with personal information, as well as turn in multiple documents, including:
Copy of the Will
Death certificate
Letters of administration from a probate court
Certification of the amount you're entitled to from the Personal Representative of the estate, which sometimes can be a lawyer or close relative
Proof of identity (passport, drivers license, birth certificate, etc.)
Once all this information is processed, you can often expect to receive funds in about a week or so. The funds are provided directly by the company, who puts a claim in for the assets and receives their cut of the payout before you do.
How Much Can I Receive with an Inheritance Advance?
Different companies are willing to lend out more or less on your advance, so it's important to shop around and get various quotes. Inheritance advance amounts can range anywhere from 15 to 30 percent, and they can sometimes go as high as 50 to 60 percent of the amount you'll inherit.
For instance, if you’re set to receive $100,000, a company that lends up to 50% of an inheritance might be willing to advance you $50,000, with a portion of that to be paid to them once you receive the full payout after probate.
Benefits of an Inheritance Advance
The most obvious benefit of an inheritance advance is receiving cash up-front rather than waiting for the probate process to finish - which can sometimes take up to a year or more. Inheritance loans before probate can be a great solution for anyone strapped for cash who might need their inheritance immediately.
There’s also no need to pay back an inheritance advance - it’s not the same thing as an inheritance loan. Because you don't have to pay back the advance, it also means you don't have to worry about interest or extra fees that can accumulate. You also might not carry the risk of losing money if your inheritance doesn't come through for some reason.
Finally, an inheritance advance can be obtained easily, unlike traditional loans. All you need is your application, copies of paperwork and the approval of the inheritance company.
Drawbacks of an Inheritance Loan
An estate loan is not that same as inheritance advance loans (which aren't really loans at all). Estate loans, also known as inheritance loans, are like any other loan that must be approved after a lengthy process that includes running your credit background and checking bank statements.
Unlike an inheritance advance, an estate loan can come with high interest fees, must be paid back eventually and can ultimately be denied.
Is an Inheritance Advance the Same as an Inheritance Loan?
Loans and advances are not the same. An inheritance advance has a fee associated with it that’s taken out before even the inheritor gets their share. The entire advance amount does not have to be paid back.
Loans on inheritance are only given after an approval process that includes credit checks, and they also have interest fees that’ll vary based on your eligibility and income. These loans must also eventually be paid back.
Update Your Will to Include Your Inheritance Today
Keeping your Estate Plan up to date and thorough is important for a number of reasons. Both your legacy as well as the financial benefits your estate will one day offer your loved ones are at stake.
Creating and updating your Will or Trust and other parts of your Estate Plan should be done regularly - every time you have a major life event (like a birth, death, marriage, divorce, or anything else that could have an impact on your heirs’ inheritance).
Learn more about how Trust & Will can help you create or update your Estate Plan today.
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