Inheritance funding can help you access inheritance funds before the probate court process is over, which can take six months to several years depending on the complexity of the estate. But this type of financing is designed for emergencies and can get expensive — you could end up paying as much as 50% of your inheritance in fees.
What is inheritance funding and how does it work?
Inheritance funding is a type of short-term financing that gives you access to the value of the funds or assets you’ve inherited before the deceased’s probate case is closed.
There are many terms used to describe inheritance funding: inheritance loans, inheritance advances, estate loans, probate loans or probate advances. But when you boil it down, there are really only two types of inheritance funding:
An inheritance advance, an advance on your inheritance amount.
An estate loan, a secured loan that uses your inheritance as collateral.
Neither of these inheritance funding methods consider your credit score when you apply. You won’t find inheritance financing at a traditional lender, like a bank or credit union, either.
Inheritance advance
Also called probate advances or inheritance cash advances, these are the most common types of inheritance financing.
It’s essentially a cash advance on your expected inheritance amount, based on what you may inherit. It’s similar to a payday loan in that way. Because you’re not actually taking out a loan, you don’t need to worry about repayments or needing strong credit to qualify.
And since it isn’t a loan, there’s no interest. Instead of interest charges, you normally pay a flat fee, which can be quite hefty — around 10% to 50% of the inheritance value.
Estate loans
Sometimes called inheritance loans or probate loans, estate loans allow you to borrow against real estate assets that you don’t yet have access to — it’s like a home equity loan. You receive your funds and repay it plus interest and fees, with your estate considered collateral for the loan.
An inheritance loan or estate loan may come with an interest rate around 8% to 10% or more, and lenders typically lend up to 65% to 70% of the property’s value.
However, not all “estate loans” work this way — sometimes lenders use this term to refer to an advance. Make sure you understand how your lender works before applying.
Compare inheritance advance providers
Find an inheritance funding company by comparing APR, minimum credit score and loan amount. Select the Go to site button for more information about a particular lender.
Where to get an inheritance advance or estate loan
You can either go with an inheritance finance company or with a hard-money lender. However, be aware that either option can come with high fees or high interest rates.
Inheritance advance companies
The most common way to get inheritance financing is through an inheritance advance company. These companies buy your inheritance directly from you in exchange for a fee.
They don’t consider your credit history when you apply, and you can get inheritance upfront, within a few days of applying. But these companies can be expensive, charging fees equivalent to those you’ll find with a high-interest loan.
Hard money lenders
Hard money lenders are short-term lenders that provide loans backed by property. Like inheritance advance companies, hard money lenders don’t consider your credit score.
This option, too, can be expensive, with APRs often higher than other subprime loans. If you’re unable to repay your loan, your lender seizes your estate assets and sells it.
Must read: Inheritance taxes
Inheritances involve two types of taxes: estate tax and inheritance tax. Estate tax is paid from the estate of the deceased before you get your funds. Inheritance tax is what you pay after you receive your inheritance.
Only a few states charge inheritance tax, including Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. This tax can range from 1% to 18% of your inheritance’s worth as of 2022, depending on how much you receive and your state’s laws. Often close relatives like spouses and dependents are exempt from paying an inheritance tax.
Make sure you’re aware of your state’s inheritance tax laws before applying for inheritance financing to know just how much you’re eligible to receive.
What you need to apply for an inheritance advance
Applying for inheritance financing is more involved than other types of loans. There’s a lot you need to do before you can even start looking at lenders. And you’ll need to gather some documentation, such as:
A copy of the decedent’s death certificate.
A copy of the decedent’s will.
Legal documents involving the probate.
Documentation stating who the estate’s administrator is.
Certification from the administrator stating how much you stand to inherit as a beneficiary.
Your valid ID.
Steps to apply for an inheritance advance
Here are the typical steps in getting advance inheritance funding:
Check with a lawyer. Inheritances and trusts are complicated, often requiring a law degree to fully understand. Talk to a lawyer specializing in these cases to make sure that you’re legally allowed to transfer your inheritance or take out funding against it.
Consult a financial specialist. Tax laws surrounding inheritance are difficult to understand. Make sure the type of inheritance financing you’re looking for is financially worth it.
Understand the value of your inheritance. Many lenders require that you stand to inherit at least $15,000 to qualify for an advance or estate loan. Make sure your inheritance meets eligibility requirements.
Notify the estate’s administrator or executor. In charge of overseeing the execution of a will, an executor is assigned their position in the will, while an administrator is assigned by court. Inform this person before you apply so that they can take steps to prepare for your advance or loan.
Compare lenders. Look at factors like fees, interest rates and loan terms. Also read reviews on sites like the Better Business Bureau (BBB) or Trustpilot to get a sense of what the typical experience is like with this lender.
Complete the application. If you’re applying online, these applications won’t take more than a few minutes. Each lender will have a different set of questions and document requirements.
Read the terms of your advance loan. Look for any hidden fees or other unfavorable terms before signing your advance or loan documents. Don’t be afraid to ask questions if you’re unsure of anything.
Sign your documents and receive your funds. You’ll typically receive your funds within a few days of submitting your advance or loan documents. Most banks directly deposit it into your account.
How long does it take to get funded and what’s next?
Getting an estate settled can take anywhere from six months to years — but immediate inheritance advances or probate loans could be funded within a few days or within five business days, depending on the lender.
What happens next depends on the type of financing you got. If you got an inheritance advance, there’s little else you need to do if the rights to the inheritance have already been transferred over.
With an estate loan, however, you make monthly repayments until your loan’s principal and interest are paid off. Keep an eye on your loan’s balance and try not to miss any repayments — these loans tend to come with high interest rates that can add up quickly.
Pros and cons of getting an inheritance advance or probate loan
There are several legitimate reasons for wanting to get an advance or loan backed by your inheritance, but it has its drawbacks.
Pros
Cover the cost of settling the estate. The probate process can be costly. Beneficiaries might be responsible for paying legal fees, paying off the estate’s debts and taxes, maintaining the estate or overseeing repairs and funeral costs. An inheritance loan can help you cover these expenses.
Negotiate real estate inheritance. Some people prefer to inherit real estate, while others just want the cash. You can take out an inheritance loan to buy the other heir’s share of the property.
Pay off personal debts. Your inheritance can help you pay off such debts as medical bills, high-interest credit cards or loans — debts that should be paid off as soon as possible to avoid tacking on even more debt.
Cover day-to-day expenses. The probate process can take years, and you might just need the funds to help you get through a tight period. In this case, taking out an inheritance loan can keep you afloat without turning to other forms of lending.
Cons
Steep fees. Since there’s a risk the inheritance might never come through, inheritance financing can come with steep fees that range from 10% to 50% of your inheritance value. Estate loans can also be more expensive than other secured loans.
Eligibility requirements. To be eligible for this type of financing, you typically need to inherit assets worth $15,000 or more. You also need to provide extensive documentation proving that you’re set to inherit these funds.
Legal complications. Inheritance funding involves some serious legal maneuvering. You might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into.
Depending on your needs, you might find alternatives that are a lot less expensive than inheritance financing.
Family allowance. Sometimes the estate administrator is required to cover living expenses of people who depended on the deceased financially. If this is you, make sure you aren’t entitled to an allowance before applying for an inheritance advance or loan.
Advance from the estate. You might be able to get your advance directly from the source — just ask the estate’s administrator first. Be aware that you might need to return your advance if the estate faces unexpected expenses.
Make a claim. Did the deceased owe you money or other assets? Consult an inheritance lawyer to see if you can file a claim on the estate.
Personal loans. If you qualify for a personal loan, you might end up with more money in the end than with an inheritance advance. Personal loans won’t eat up your inheritance’s value and you may get a lower interest rate on the personal loan, depending on your credit score.
Home equity borrowing. If you own a home with at least 15% to 20% equity, you could take on a home equity loan or home equity line of credit (HELOC). These loans tend to come with lower interest rates than unsecured personal loans as well.
Bottom line
Inheritance financing is an expensive option worth treating as a last resort. Before you apply for an inheritance loan, make sure you understand your legal obligations and what your assets are really worth — after taxes as well. If you can afford to wait, then that may be the best route. If the probate ends swifty, you may have paid extra to get those funds instead of just waiting a few extra weeks or months.
You might want to look into other financing options like personal loans to find the best choice for your circumstances.
Anna Serio is a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY.
My mother passed and myself, my sister and my brother are expecting a modest inheritance from her death. She had no will and no outstanding debts or creditors. The only thing she had was her house she owned outright. It is currently I probate and I just am going through a divorce and am without a place to live while I search for a rental with my section 9 voucher. I’m disabled and am currently without a home. I was thinking of an inheritance advance yes or no and where should I go? Thank you
You may need to speak to your siblings to allow you to stay in the house until the probate is done but this is with them agreeing to it. If you are looking for an inheritance advance, you might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into. Hope this helps!
What would happen if I got an advance on my inheritance and it was all in my mother’s estate? However, when I went to court and the judge said the house was never my mom’s because my father never put her on the deed. So now the house is in my dad’s name. Do I have to still pay it back?
Thanks for getting in touch with Finder. I hope all is well with you. :)
Before a lender approves your loan application, you would need to present relevant and important documents to support your claim that you have an inheritance. The lender would know during your application if you legitimately have an inheritance. For this reason, if in case the lender finds out that you don’t have any inheritance, then your loan application would be rejected.
If in case you were still approved and then in the future, you didn’t receive any inheritance, you would still need to pay back the lender by other means.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
My parents want to sell me their house (which is paid off) Is there a type of loan(inheriting loan)out there that would be cheaper than getting a standard mortgage bank loan?
Thanks for getting in touch! As it says on our page, Inheritance funding is a short-term form of financing that grants you access to the value of the funds or assets you’ve inherited quickly. There’s two types of inheritance funding: an advance on your inheritance and a loan using your inheritance as collateral. Neither consider your credit when you apply, and you can’t find these options with a traditional lender. First you need to check your credit score, then go back to this page to choose the credit score and the state on the table provided. It will show all the lenders for your state so you can go ahead and get started on an inheritance loan.As a friendly reminder, review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the product disclosure statement of the product and contact the lender should you need any clarifications about the loan. You may also seek help from a mortgage broker if you need further assistance as they will be able to take your circumstances into account.
Hope this helps! Feel free to reach out, we’re here!
Probate can be a long, drawn-out process, especially if the estate has to file a federal income tax return and wait for a return letter from the Internal Revenue Service approving the close of the estate. You may be able to get an advance on your inheritance in the form of an inheritance loan if you can’t wait
that long to access your inheritance.
When you take out a loan against your inheritance, lenders do require documentation as proof of your inheritance. This may include a copy of the will, an official death certificate, copies of the letters of administration issued by the probate court officially opening the probate proceeding and appointing the personal representative, a certification of the amount of your inheritance from the personnel administrator and your identification.
You might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into. I hope this helps.
Should you wish to have real-time answers to your questions, try our chat box on the lower right corner of our page.
I would like to know can an inheritance lender provide you with the total value of an inheritance after taxes if required by state. Basically can they let me know the exact amount I stand to inherit before issuing the loan
Thanks for getting in touch with finder. I hope all is well with you. :)
Generally, it would be you who would give the figure of how much you will be inheriting. Of course, the lender can also give you advice or help you figure out your total inheritance after taxes. To obtain an inheritance loan, you would need to provide a lot of documents showing the lender that you truly has an incoming inheritance. Thus, it would be helpful if you already know the exact amount of your inheritance.
It is also advisable that you speak to experts as well as involve your friends and family to make sure you’re making the right decision for your situation.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
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My mother passed and myself, my sister and my brother are expecting a modest inheritance from her death. She had no will and no outstanding debts or creditors. The only thing she had was her house she owned outright. It is currently I probate and I just am going through a divorce and am without a place to live while I search for a rental with my section 9 voucher. I’m disabled and am currently without a home. I was thinking of an inheritance advance yes or no and where should I go? Thank you
Hi Mary,
Thank you for reaching out to Finder.
You may need to speak to your siblings to allow you to stay in the house until the probate is done but this is with them agreeing to it. If you are looking for an inheritance advance, you might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into. Hope this helps!
Cheers,
Reggie
What would happen if I got an advance on my inheritance and it was all in my mother’s estate? However, when I went to court and the judge said the house was never my mom’s because my father never put her on the deed. So now the house is in my dad’s name. Do I have to still pay it back?
Hi Mandy,
Thanks for getting in touch with Finder. I hope all is well with you. :)
Before a lender approves your loan application, you would need to present relevant and important documents to support your claim that you have an inheritance. The lender would know during your application if you legitimately have an inheritance. For this reason, if in case the lender finds out that you don’t have any inheritance, then your loan application would be rejected.
If in case you were still approved and then in the future, you didn’t receive any inheritance, you would still need to pay back the lender by other means.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
My parents want to sell me their house (which is paid off) Is there a type of loan(inheriting loan)out there that would be cheaper than getting a standard mortgage bank loan?
Hi Lisa,
Thanks for getting in touch! As it says on our page, Inheritance funding is a short-term form of financing that grants you access to the value of the funds or assets you’ve inherited quickly. There’s two types of inheritance funding: an advance on your inheritance and a loan using your inheritance as collateral. Neither consider your credit when you apply, and you can’t find these options with a traditional lender. First you need to check your credit score, then go back to this page to choose the credit score and the state on the table provided. It will show all the lenders for your state so you can go ahead and get started on an inheritance loan.As a friendly reminder, review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the product disclosure statement of the product and contact the lender should you need any clarifications about the loan. You may also seek help from a mortgage broker if you need further assistance as they will be able to take your circumstances into account.
Hope this helps! Feel free to reach out, we’re here!
Best,
Nikki
Does my inheritance have to be in probate to receive a loan? My trust fund is with the Bank of America US trust.
Hello Jeff,
Thank you for your comment.
Probate can be a long, drawn-out process, especially if the estate has to file a federal income tax return and wait for a return letter from the Internal Revenue Service approving the close of the estate. You may be able to get an advance on your inheritance in the form of an inheritance loan if you can’t wait
that long to access your inheritance.
When you take out a loan against your inheritance, lenders do require documentation as proof of your inheritance. This may include a copy of the will, an official death certificate, copies of the letters of administration issued by the probate court officially opening the probate proceeding and appointing the personal representative, a certification of the amount of your inheritance from the personnel administrator and your identification.
You might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into. I hope this helps.
Should you wish to have real-time answers to your questions, try our chat box on the lower right corner of our page.
Regards,
Jhezelyn
I would like to know can an inheritance lender provide you with the total value of an inheritance after taxes if required by state. Basically can they let me know the exact amount I stand to inherit before issuing the loan
Hi Bobby,
Thanks for getting in touch with finder. I hope all is well with you. :)
Generally, it would be you who would give the figure of how much you will be inheriting. Of course, the lender can also give you advice or help you figure out your total inheritance after taxes. To obtain an inheritance loan, you would need to provide a lot of documents showing the lender that you truly has an incoming inheritance. Thus, it would be helpful if you already know the exact amount of your inheritance.
It is also advisable that you speak to experts as well as involve your friends and family to make sure you’re making the right decision for your situation.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua