An inheritance advance can provide much-needed financial relief whilst waiting for probate to complete, but it requires careful consideration before proceeding.
It is a rather new product that has largely come about due to increased inheritance tax obligations in the UK and the emergence of new providers in the space.
Whether you are looking to borrow £25,000 or £250,000, there are specific reasons for using an inheritance advance and implications for all the beneficiaries involved. Our guide explains this in more detail.
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SubscribeWhat is an Inheritance Advance Used For?
According to leading inheritance finance provider, Provira, this type of finance should address a genuine financial need such as inheritance tax bills, funeral expenses, property maintenance costs, or personal emergencies that cannot wait for probate to complete.
If you can reasonably manage without accessing your inheritance early, it may be worth waiting to avoid the associated costs and fees. Consider all alternatives before committing to an advance, as the financial impact on your final inheritance can be substantial.
How Much Will an Inheritance Advance Cost You?
An inheritance advance will cost between 15% and 30% of your inheritance advance amount, depending on fees, interest rates, and how long probate takes. The cost includes arrangement fees, administration charges, and interest that compounds over the period, which can be unpredictable in length.
As an example from Provira, a £50,000 with an arrangement fee of 2% and interest rate of 24% fixed, will incur a total balance of £63,240.
Most providers release between up to 50-60% of your expected inheritance value, with the remaining amount covering all fees and interest. Request a complete breakdown of all costs in writing, including scenarios for different probate completion timeframes, so you understand exactly what you will pay.
What Documents Will You Need to Provide For An Inheritance Advance?
Yes, including the will, death certificate, estate asset details, proof of identity, and executor contact information. Proof of your identity and relationship to the deceased is essential, along with contact details for the solicitor or executor handling the probate.
Some providers may also request evidence of why you need the advance and how you plan to use the funds. Having all relevant paperwork organised and readily available before applying speeds up the process considerably and can reduce the time from application to receiving funds.
What Happens if Probate Takes Longer Than Expected?
Your costs will increase significantly as interest continues accumulating until the estate finally settles. Some providers cap their fees at a certain timeframe, whilst others continue charging interest indefinitely, which represents a significant financial risk.
Understanding how your provider structures their fees for extended periods is crucial before committing to an agreement. Unexpected complications such as disputes between beneficiaries, contested wills, or complex asset valuations can add months or even years to the probate process.
Are There Better Alternatives to an Inheritance Advance?
Possibly, depending on your specific financial needs and circumstances. Personal loans from traditional lenders often offer lower interest rates if you have good credit, though they require regular monthly repayments and credit checks that inheritance advances do not.
Credit cards might suffice for smaller, short-term funding needs, particularly if you can access zero-interest promotional periods.
Some beneficiaries arrange payment plans with creditors or negotiate extended deadlines for bills, avoiding borrowing costs entirely. Research indicates that approximately 38% of beneficiaries who take inheritance advances later regret not exploring alternatives first due to the impact of fees on their final inheritance.
Taking time to thoroughly evaluate these considerations before applying for an inheritance advance helps protect your financial interests.
The right decision depends on your unique circumstances, the urgency of your financial needs, and your ability to absorb the associated costs whilst still achieving your objectives for the inheritance.
