In Oregon, a typical estate takes 6-9 months to complete probate. If you expect to receive a bequest, that time can feel like it moves far too slowly. You might also be aware of companies that offer an inheritance advance, giving you a lump sum faster… but at a cost. An inheritance advance can be tempting, but is it a good idea?

What is an inheritance advance?

Put simply, an inheritance advance is money that a company provides you, in exchange for a payment. Inheritance advances are often compared to payday loans, where a person can receive an amount of money that’s paid back, often at high interest rates, and with potential high fees or other costs.

How an inheritance advance works can vary, but here’s a common way it might play out. Let’s say that you expect to receive an estate bequest of $100,000. (This is also pretty simplified, and other considerations could come into play.)

• If you wait for the probate to conclude, you’ll receive the full amount of your bequest.
• An inheritance advance might provide you $70,000–$80,000, and they will have the full $100,000 paid to them out of the estate.

In exchange for an up-front lump sum received faster than probate concludes, you in turn have to give up a hefty amount, often at least 20%.

The thing to consider: Does your need or want to have your bequest in-hand faster than probate deserve you skipping on a significant chunk of your bequest? Are you sure that you will actually receive your entire bequest from the estate or are you getting a loan that you might not be able to pay back later? 

Potential benefits

The perceived benefits of an inheritance advance in Oregon comes down to speed of payment.

At a minimum, Oregon probate takes 5 months to conclude, and 6-9 months is an average timeframe. A company providing an inheritance advance essentially promises to provide you money ahead of the probate clock. Instead of receiving the full bequest, the company sends you a smaller portion. They in turn will claim the full amount from the estate itself.

On the one hand, this can sound advantageous. You receive at least some money, albeit less than you might have received. Plus, the advance company will receive full payment not necessarily from you but from the estate. Should this probate waiting period coincide with a financial emergency, an advance can appear especially alluring.

Inheritance advances come with drawbacks

Getting at least some money fast can sound appealing. However, that doesn’t mean it’s a good idea. Inheritance advances can also come with significant drawbacks.

• You may overborrow on your inheritance and then have to repay the inheritance advance personally. 
• You sign away your interest in the estate. The advance company becomes part of the estate instead.
• The interest rates and fees are high, typically at least 20% and often higher.
• You’ll receive less than you would have been entitled to from the estate itself.
• The advance company can raise objections to the estate, causing potential problems between you and other people, such as family, involved in the estate.
• The company might force the sale of assets that otherwise would have remained part of the estate.
• Agreements may be written in a way that you can breach the terms and wind up having to repay the advance, with additional interest, penalties, and/or fees.
• Coordinating with an inheritance advance company may increase the legal costs of settling the estate.
• If a creditor claim causes a change in the amount you might have received, that can cause problems with the estate, the advance company, and what you might potentially have to repay.

With an inheritance advance, you’ll wind up receiving less than you were entitled to from the estate due to interest rates. Plus it can swiftly create conflict and ill will between you and other people involved in the estate, such as your family.

You can wait out probate

There could be circumstances where an inheritance advance is worthwhile. However, if you are facing a difficult situation where you’re considering an inheritance advance, it may be a better idea to discuss the matter with others involved in the estate, as well as your Oregon estate attorney.

In general, though, it’s more advantageous to wait for the probate to conclude. You can receive the full bequest you are entitled to, without worrying about the pitfalls and drawbacks that come with an advance.

In our experience, inheritance advances can quickly cause more problems than they’re worth. Odds are you will be better off if you wait out the probate. If you have questions, you can consult with your Oregon attorney: