Many beneficiaries are surprised to learn that estate administration can take upwards of a year before they receive their inheritance.
Beneficiaries who would like to receive their inheritances faster have three primary options:
- Speak with the executor or trustee about making an advance partial distribution
- Sign with a financing company that offers estate loans
- Sign with a financing company that offers estate cash advances
How to Get an Advance, Partial Distribution
Speaking with the executor or trustee to receive an advance, partial distribution on your inheritance is often the best strategy to get your inheritance faster since it doesn’t cost you or the estate anything.
The ‘catch’ is that this option may not be available in every instance, or may take a bit of time to secure.
Beneficiaries of an estate are like shareholders in a company. Before payment to beneficiaries can be made, the executor or trustee must ensure that the estate has enough money to pay for the estate administration expenses, debts, and taxes.
Depending on how well the principal prepared the executor or trustee for the role, identifying all these liabilities may take some time. Additionally, many states have mandatory notice periods for other creditors to come forward with a claim against the estate assets.
As fiduciaries, executors and trustees have a responsibility to protect and serve all beneficial interests in the estate. This includes creditors just as it includes beneficiaries. As a result of these responsibilities, executors and trustees are encouraged to refrain from making final distributions to beneficiaries until they are supremely confident that there is enough money for everyone.
That being said, in some estates, the initial inventory of assets and liabilities makes clear relatively early in the administration process that the estate has significantly more assets than liabilities. In these cases, it may be appropriate for the executor or trustee to make partial distribution to the beneficiaries, if requested.
The key to securing these advance, partial distributions is honest communication between the fiduciary and the beneficiaries. As a beneficiary, you should keep in mind that estate fiduciaries are unlikely to make advance distributions unless there is ample coverage of the liabilities since the fiduciaries can be held personally liable for negligence. Moreover, if you do secure a partial advance, the fiduciary will likely ask that you sign an acknowledgement that you will return the money in the event that the final accounting reveals insufficient assets to distribute that advance amount to you.
Engaging a Financing Company for an Estate Loan
If working with the fiduciary to obtain an early partial distribution is not an option, or if that partial distribution is insufficient to cover your needs, you might consider reaching out to an estate financing company for an estate loan.
Estate loans are loans given to beneficiaries of a last will or trust.
Just like with a regular loan, the lender provides you a sum of money in exchange for regular interest and/or principal payments. You may also need to provide the lender with collateral guaranteeing the loan.
When you receive your inheritance, you can use your inheritance to pay off the balance of the estate loan.
Engaging a Financing Company for an Estate Cash Advance
The third option to receive your inheritance early is engaging a financing company for an estate cash advance.
With an estate cash advance, the financing company gives you money upfront in exchange for a fee. In most cases, you won’t actually have to pay the fee until you receive your inheritance.
The fee you pay on an estate cash advance varies based on a number of different factors:
- the value of the estate assets relative to its liabilities
- the expected time needed to close the estate and receive your inheritance
- the number of other beneficiaries and heirs who will be dividing the estate property
- other risk factors
In comparison to an estate loan, with an estate cash advance the borrower’s personal credit and employment history is less relevant. The estate cash advance financing company will focus only on the characteristics of the estate and your inheritance claim.
What’s the best option to receive your inheritance faster?
Third-party estate loans and estate cash advances can be creative, effective financing solutions to obtain your inheritance faster than waiting for the estate to close. As a first option, however, you should check whether you are able to work directly with the estate fiduciary – the executor or the trustee – to obtain an advance sufficient to meet your needs.
Having that quick conversation with the fiduciary is relatively straightforward and doesn’t cost you or the estate anything. If the person gifting you the inheritance made their estate plan with Just In Case Estates, you can communicate with the fiduciary directly from the member dashboard. If you have any questions, please reach out to our Member Success team who will be happy to assist.