The Cost of Receiving an Advance Against Your Inheritance

If you are planning to get an advance against your inheritance, you need to understand that it comes with a financial cost. You need to weigh the cost against the benefits of getting access to some of your money earlier via an inheritance advance.

The first thing to do is consider the length of potential probate. Generally, the beneficiaries of an estate must file probate of a will, which gets the judge to approve the administration and distribution of an estate. Before the estate’s representative can release any of the funds to beneficiaries, the administrator has to pay bills due from the deceased and collect any money due to the estate. If there are outstanding disputes, this process can take years. Using your knowledge of the estate, you can help determine how long the process will take, which can let you calculate missed opportunity costs and the time value of money.

When you get a probate advance, you get rid of missed opportunity costs and lose little due to the time value of money. However, you will owe a fee, which is related to the size of the inheritance advance. You do not have to qualify for a loan, make payments, or worry about repayment if the estate does not have enough funds to repay the advance. However, assuming that the estate remains solvent and can repay the advance, the fee is normally about one-fourth of the size of the advance amount.

Since the fee is substantial, inheritance advances should not be used for frivolous things. However, they are an excellent option for people who need living expenses or the chance to take advantage of financial opportunities before the end of probate. Contact us to find out more.