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When a loved one dies, the probate process can be lengthy, which can leave heirs short of cash when they might need it most. Probate advances aim to solve this shortfall by providing much-needed funds long before the estate is settled. But you’ll have to pay probate advance fees that take a bite out of your inheritance.
A probate advance — also known as an inheritance advance, probate cash advance or estate advance — is a cash advance against money you’ve inherited but haven’t received yet. Normally, heirs can’t access the money they’ve inherited until after the probate process is complete, which can take up to a year or more.
However, a probate advance allows heirs to access those funds long before the estate is settled and funds are released. And, unlike a probate or inheritance loan, a probate advance is not a loan because you don’t have to pay it back while waiting for your inheritance and there are no interest charges. Instead, you assign a portion of your inheritance to an inheritance funding firm that gets paid back once the estate is settled.
How do inheritance advances work?
Probate advances work by giving heirs access to their inheritance while the probate process is ongoing. So, if you are an heir to an estate or a beneficiary, an inheritance advance company confirms the amount coming to you and offers a lump sum equal to a percentage of what you’re owed. Depending on the particulars of your case, that might be anywhere from 15% to 50%.
If the amount offered is acceptable, you’ll sign a contract and assign a portion of your legacy to be paid directly to the company, which will disburse your advance. Once probate ends, the funding company can collect its fee and the amount it advanced you from the estate, and you’ll receive the remainder of your inheritance.
How much does an inheritance advance cost?
To access a portion of your inheritance before probate ends, you’ll typically pay a flat fee between 10% and 50% of the inheritance. Some companies may calculate the probate advance fees as a percentage of the advance you take. Either way, that money doesn’t come out of your pocket. It’s paid to the probate cash advance firm after the estate is settled.
For example, if you stand to inherit $50,000 and you want an advance of $10,000, a probate advance company may charge a fee of 30% of the inheritance — or $15,000. So you would get $10,000 upfront from the company, and then, after probate ends, the company will take its $15,000 fee plus the $10,000 you were advanced, and you’ll get the remaining $25,000.
The exact cost of the advance depends on a number of factors, including the complexity of the estate, the size of your advance and the estimated time it will take until your estate closes. Some advance firms offer rebates if the estate closes sooner than expected.
Who are probate advances best for?
Not everyone should apply for a probate advance, because it can be pretty pricey. For example, if the decedent was your spouse — and the major breadwinner — and you need the money to pay your mortgage or other important expenses, an advance on your inheritance may be the right move.
On the other hand, if you simply don’t want to wait for the money or are planning to use it for a non-critical expense or purchase, it might make more sense to be patient. For instance, if you want to use the money to consolidate your debts — but you can still make your minimum payments and keep your accounts in good standing — waiting to receive the full inheritance may be more beneficial in the long run.
Pros and cons of probate advances
While an inheritance advance can be a lifesaver in certain situations, it’s not a decision to take lightly.
Pros
Fast access to inheritance. With a probate advance, you can gain access to those funds months or even years earlier than you would if you waited for probate to end.
No interest or payments. A probate advance is not a loan, so you don’t have to pay it back out of pocket or with interest. But, you will pay a fee from your inheritance.
Bad credit OK. Because you’re not personally responsible for repaying the advance, you can qualify even with poor credit.
No hidden fees. In most cases, an inheritance advance company only charges one fee for the service. But it’s still a good idea to read your agreement carefully to make sure.
Advance companies may assume risk. Depending on your agreement, some probate funding firms may take on the risk of your inheritance being smaller than expected and accept a smaller fee.
Cons
Reduced inheritance. Early access to funds means you won’t get the full value of your inheritance, and probate advance fees can be steep.
May not be necessary. If probate ends earlier than expected, you just paid a substantial fee for money you might have been able to wait for.
May have to pay agreed fee even if inheritance is less than expected. Depending on your contract, if you get less than your expected inheritance, you may still be on the hook for the full fee.
More expensive than other options. Probate advances generally don’t come cheap — you may be able to save money by taking out a personal loan or using your home’s equity to solve your financial need instead.
How to get a probate advance
Be sure to do your research before applying for an inheritance advance. You may also want to consult a lawyer to make sure you’re legally allowed to transfer a portion of your inheritance.
Compare fees, requirements, funding times and other details from multiple probate advance companies
Get a free initial consultation
Apply for an inheritance advance
Review the offer and terms before signing
Receive funding, usually within a few days
Documentation needed for inheritance advance
You’ll usually need to supply the following documentation before you can get approved for a probate advance.
Death certificate
Copy of the will, if applicable
Legal documents showing probate is open and who is the administrator of the estate
Documentation of the amount of your inheritance — usually supplied by the executor or personal administrator of the estate
Proof of identity, such as driver’s license or passport
Depending on the inheritance advance company, it may be able to work directly with the executor of the estate to obtain most of the necessary documentation on your behalf.
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Eligibility requirements for inheritance advances are pretty simple.
Must be a beneficiary or heir to an estate
Must be a US citizen or permanent resident
The estate must be in probate or in the process of opening
Must meet minimum inheritance requirement (e.g., $10,000)
Inheritance advances vs. inheritance loans
A probate advance and a probate loan are two ways to access a portion of your inheritance before the estate closes, but it’s important to understand the differences.
As explained, an inheritance advance is a sum of money given to you by a probate advance company while the estate is still in probate. You don’t pay interest on the advance, and you don’t have to pay it back while you wait for your inheritance. Instead, you assign a portion of your inheritance to the funding company, and it collects the advance it gave you plus its fee directly from the estate. This option might be best if you don’t have room in your budget for another monthly payment.
By contrast, a probate loan uses your inheritance as collateral, and you are responsible for repaying it. You’ll usually pay it back in installments, plus interest, just like a traditional loan. Some inheritance loan providers may only require that you make interest payments on the loan until probate is complete. Then, you’ll repay the principal once your inheritance clears.
You may need decent credit to qualify for a probate loan, and you’ll essentially go through the same process as with any other loan, such as verifying employment and income. You might choose a probate loan over an advance if you qualify, can afford the monthly payments and think this option will ultimately be less costly than an advance.
If you’re not eligible for an inheritance advance or decide it’s not right for you, consider these alternatives:
Family allowance. Depending on your relationship with the deceased, you may be eligible for funds from the estate to cover expenses during probate. The rules surrounding family allowances and how much you can get vary by state.
Inheritance loan. An inheritance loan also allows you to access a portion of your inheritance, but you’ll have to pay it back, and it may be harder to qualify for.
Personal loans. If you need money before your inheritance comes through, getting a personal loan to cover your expenses may be less expensive than a probate advance.
Home equity financing. Homeowners may want to consider applying for a home equity loan or home equity line of credit (HELOC) rather than forfeiting a substantial portion of their inheritance.
The probate process can take months or even years to complete. The long wait may be a problem for heirs relying on those funds after their loved one passes away. Getting a probate advance can give you access to a portion of that money within days rather than months, allowing you to cover your expenses before the estate closes and funds are distributed. But it’s an expensive proposition, so it’s worth looking into other alternatives first.
Frequently asked questions
What is probate?
Probate is the formal legal process of administering a decedent’s estate. In general, this is when the will is validated (if there is one), and the executor or personal administrator — who is approved or appointed by the court — facilitates the distribution of the estate’s assets.
Do probate cash advance companies check credit reports?
A company that offers inheritance advances could check your credit reports. It may want to look for judgments, bankruptcies or child support issues to determine what effect they might have on the inheritance payout. However, a good credit score is not required to qualify for a probate advance. You may want to consider other borrowing options that don’t require a credit check.
Are there minimum and maximum amounts I can get with an inheritance advance?
Yes. Most inheritance advance companies have minimum and maximum probate cash advances, which can vary. For example, the minimum advance might be as low as $5,000 and the maximum as high as $300,000 or more.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf. See full bio
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