If you’re named in someone’s will or are set to inherit through an estate, you may have seen advertisements from companies offering to pay you now, before probate closes, in exchange for a portion of what you’re set to receive. These arrangements go by several names: inheritance advances, probate advances, inheritance funding, inheritance cash advances, or inheritance purchase agreements. They are becoming more common, but they have significant legal and financial consequences which you must understand before you decide whether one is right for you.
Is an Inheritance Advance a Loan?
The first thing to understand is that most inheritance advances are structured as purchases rather than loans. There is typically no repayment schedule, no monthly payment, and no personal obligation to repay if the inheritance ultimately does not materialize as expected. This structure affects how these agreements are regulated and what protections may or may not apply to you as a consumer.
How Does an Inheritance Advance Work?
The basic mechanics are straightforward. You are approached by, or apply to, a company that specializes in these advances. The company reviews the estate, including its estimated value, the assets involved, and how far along probate is, and makes you an offer: a lump sum in exchange for a specified share of your inheritance.
If you accept and sign the agreement, the company obtains the legal right to receive a portion of your inheritance when the estate settles. The company then notifies the executor or administrator of the estate, known as the personal representative, of its interest. Depending on the terms of the transaction and where the estate is being probated, paperwork may also be filed with the probate court. In California, that court filing is required by state law. Washington has no equivalent requirement, which means less visibility into these transactions for Washington consumers and courts. When the estate is distributed, the company receives its portion directly from the estate.
The process can move quickly, sometimes within days, which is part of the appeal for heirs who need funds while an estate works its way through the courts.
Why Do Heirs Use Inheritance Advances?
Probate in California and Washington can take anywhere from several months to several years, depending on the complexity of the estate, whether there are disputes among heirs, and court scheduling. During that time, beneficiaries generally cannot access their inheritance until estate administration is complete and the court authorizes distributions. For those facing immediate financial needs, such as housing costs, medical bills, or lost income, an inheritance advance can feel like a practical solution. For others, it may not be the right fit. Understanding the full picture is crucial.
What Does an Inheritance Advance Actually Cost?
The cost of an inheritance advance is the difference between the amount the company receives when the estate settles and the amount they paid you upfront.
The size of that difference depends on several factors, including the estimated value of the estate, how long probate is expected to take, and the specific terms of the agreement. Some agreements are straightforward. Others are more complex. In many transactions, the company collects what it is owed directly from the estate rather than requiring the beneficiary to make ongoing payments, but the terms of any individual contract will determine exactly how that works. Reading the agreement carefully, and having an attorney review it before you sign, matters more than most people expect.
Before You Sign an Inheritance Advance Agreement
An inheritance advance can make sense in the right circumstances. It can also mean giving up significantly more than you realize. Consider some of the most important questions to ask before signing before you commit.
If you have been presented with an inheritance purchase agreement and want to understand what you would be agreeing to, or if you have already signed one and have questions about your rights, our attorneys can help. We represent consumers in Washington and California in matters involving these agreements.
Contact us online to schedule your free consultation.
