You can obtain an advance on your inheritance by using an inheritance loan (also known as an estate loan). Here are the key points to understand about inheritance advances. See Best Car Insurance Companies 2024
An inheritance cash advance, which is also referred to as an estate advance or inheritance advance, helps you and your family access funds from an inheritance immediately. You can discover more about how an inheritance advance could potentially assist you following the death of a loved one.
What Is an Inheritance Advance?
If you’re curious about what an advance is, it is essentially a sum of cash that is given to you before you receive the total amount—similar to a cash advance on your paycheck.
As indicated by the name, estate advances or inheritance advance loans are simply an advance you receive based on the expected amount from your inheritance. When you take out an inheritance advance, you are required to repay the company providing the advance a fee, which is deducted directly from your inheritance.
Why Get an Inheritance Advance?
Going through probate can often be a very lengthy process, especially if the total inheritance exceeds the threshold that some states allow to bypass probate. For example, in California, as of 2021, heirs can avoid the probate process completely or access a simplified version if the inheritance is below $166,250. However, many times the value of the assets surpasses this limit, leading heirs to navigate through the probate process for an average of a year and a half.
The duration of probate is a important reason why obtaining an inheritance advance may be beneficial for heirs who require swift access to their funds. Companies that offer inheritance advances typically take about one week to issue the funds. This option can be especially useful for estates that lack real estate or for heirs who are financially constrained, need to repay loans, or have urgent bills to settle.
How Does an Inheritance Advance Work?
Individuals interested in acquiring an inheritance advance simply need to contact a company that specializes in this service. The company will assess the amount that the inheritor is entitled to and confirm whether the person requesting the advance is indeed a legitimate heir of the estate.
To initiate the process, you’ll be required to complete an application with personal details, and submit several 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 may be a lawyer or a close relative
- Proof of identity (passport, driver’s license, birth certificate, etc.)
Once your information has been processed, you can generally expect to receive funds within about a week. The funds are provided directly by the company, which claims a share of the assets before you receive your payout.
How Much Can I Receive with an Inheritance Advance?
For example, if you are slated to inherit $100,000, a company that offers up to 50% of an inheritance could potentially grant you $50,000, with a portion of that amount returned to them once you obtain the full payout after the probate process.
Advantages of an Inheritance Advance
The most apparent advantage of an inheritance advance is receiving funds up front instead of waiting for the probate process to conclude—which can take a year or longer. Inheritance loans prior to probate can are an excellent solution for those facing financial difficulties who need immediate access to their inheritance.
What’s more, unlike inheritance loans, there is no obligation to repay an inheritance advance. This means you won’t have to worry about interest or additional fees that could accumulate over time. You also minimize the risk of losing out financially if your inheritance does not materialize.
Finally, obtaining an inheritance advance is often straightforward and less complicated than traditional loans. All that is required is submitting your application, providing necessary documentation, and securing approval from the inheritance company.
Disadvantages of an Inheritance Loan
An estate loan is not the same as inheritance advance loans, which are not actually considered loans. Estate loans, also referred to as inheritance loans, function like any other loan and require approval following a thorough process that includes reviewing your credit history and examining bank statements.
In contrast to an inheritance advance, an estate loan may carry high-interest fees, requires repayment at some point, and can potentially be denied.
Is an Inheritance Advance the Same as an Inheritance Loan?
Loans and advances are distinct from one another. An inheritance advance comes with a fee that is deducted before the inheritor receives their share. The full amount of the advance does not need to be repaid.
Inheritance loans are granted only after a detailed approval process that involves credit checks and typically include interest fees that vary depending on eligibility and income. These loans must also be repaid eventually.
Update Your Will to Include Your Inheritance Today
It is essential to keep your Estate Plan current and comprehensive for various reasons. Your legacy, and the financial benefits your estate will provide to your loved ones in the future, are at stake.
Creating and updating your Will or Trust, along with other components of your Estate Plan, should occur regularly—especially after important life events such as births, deaths, marriages, divorces, or any situations that could affect your heirs’ inheritance.