A family in Brooklyn inherits their parents’ brownstone—the home they grew up in. The will is clear, and they are the sole beneficiaries. But the estate is now tied up in Kings County Surrogate’s Court, a process that can easily take nine months to over a year. During that time, property taxes are due, the boiler needs an expensive repair, and the executor has to pay for upkeep. The cash in the estate is frozen, and the beneficiaries see an online ad promising an “inheritance advance” in 48 hours. It sounds like the perfect solution. It is almost never the prudent one.
For decades, I’ve worked with families stewarding assets from one generation to the next. Part of that stewardship is protecting a legacy from being eroded by unnecessary costs. Inheritance loans, often marketed as probate loans, represent a significant threat to the value of what your loved ones left you. While these companies are not illegal, their business model relies on an heir’s impatience or financial distress.
What Is an Inheritance Advance?
A probate advance is not a loan. You are not borrowing money that you pay back over time with interest. Instead, you are selling a portion of your future inheritance to a third-party finance company at a steep discount. In exchange for cash today, you sign a contract assigning that company the right to collect a larger amount directly from your share of the estate when it finally closes.
Because it is structured as a purchase, it often falls outside of state usury laws that cap interest rates. The company frames it as a simple fee for early access to your money. When you calculate the effective annual interest rate, however, it can be staggering—sometimes 40%, 60%, or even higher.
The transaction is typically “non-recourse,” meaning if the inheritance is smaller than expected, the company cannot pursue your personal assets. This is their primary selling point. But these companies do their homework. They vet estates carefully and will only fund those they are confident will pay out, minimizing their own risk while maximizing their return at your expense.
The True Cost to Your Legacy
The cost is the fundamental problem. An heir might receive $50,000 in cash today in exchange for assigning $75,000 of their inheritance to the funding company. If the estate takes a year to settle, that $25,000 fee amounts to a 50% annual rate. Had that money remained in the estate, it would have passed directly to the beneficiary. This is a significant and avoidable depletion of generational wealth.
These contracts also complicate the executor’s work. The executor has a fiduciary duty to settle the estate according to the will and the law. Introducing a third-party creditor with a claim on a beneficiary’s share adds another layer of administrative burden and potential for conflict, especially if other beneficiaries are not involved.
What happens if an unexpected creditor of the deceased emerges? Or if a dispute over the will’s validity arises? The funding company’s contract ensures they get paid first from your share, leaving you to bear the full brunt of any reduction in the estate’s value. Your inheritance could shrink dramatically, or even disappear, after the advance is paid.
Better Alternatives Under New York Law
Before an heir considers one of these advances, they should speak with the estate’s attorney. New York law provides several avenues for addressing liquidity issues during probate without resorting to predatory financing.
The Executor or Administrator of the estate has the power—and the duty—to pay for the estate’s legitimate expenses. This includes funeral costs, administrative expenses, and debts of the decedent. Under New York’s Surrogate’s Court Procedure Act § 1811, these expenses are given priority for payment from estate assets. If the estate holds cash or marketable securities, the executor can and should use them to meet these obligations, preserving real estate or other significant assets.
When beneficiaries themselves face personal financial hardship, it may be possible to request a partial distribution from the estate. If the estate is clearly solvent—meaning its assets far exceed its known debts and expenses—an executor can petition the court for permission to distribute a portion of the inheritance early. While this requires a formal court proceeding, it is a far more responsible and cost-effective path. It keeps the full value of the inheritance within the family, where it belongs.
Stewardship. It means making deliberate, prudent choices. An inheritance is the final gift from a loved one, the result of a lifetime of their work. Giving away a substantial portion of it for the sake of convenience undermines that legacy. The courts and the law provide mechanisms to handle these situations. They may require more patience, but they protect the integrity of the estate.
If you are a beneficiary or executor of a New York estate facing financial pressures during the probate process, do not act hastily. Before you consider signing away a piece of your inheritance, schedule a consultation with our firm. We can review the estate’s specific circumstances and advise on petitioning the Surrogate’s Court for the release of funds or a partial distribution.
