The Difference Between Trust, Estate, and Probate Advances

You may have heard the terms estate advance, probate advance, and trust advance and wondered whether they are the same thing. All three are types of inheritance advances. For the most part, they are used interchangeably to describe any type of advance where the assets of an estate are used as collateral. However, there are some differences between them. Inheritance loans are not really loans, but advances.

During probate or other administrative procedures, the heirs of an estate or the beneficiaries of a trust may not be able to access funds. In that case, they may want a loan until the will is probated or until the trust can begin to disperse funds. It can be easy for people to think of this as a way for eager heirs to get their hands on money, but estate law can be surprisingly complex. If estate assets are tied up in real estate, getting an advance on the estate can help speed up the probate process.

What is a trust?

A trust is a legal entity that holds and distributes assets on behalf of one or more beneficiaries. People use trusts for a variety of reasons. They can be a less complicated way to distribute assets, protect assets from creditors, and help reduce inheritance taxes. However, trusts can also make it more complicated for heirs to access money.

What is an estate?

An estate refers to all of the property owned by a person at the time of their death. It includes real estate, personal property, stocks, cash, and other tangible and intangible assets.

What is probate?

Probate is a court-supervised process that affirms a will, ensures that creditors are paid, and distributes assets in accordance with the wishes of the testator.

What are inheritance loans?

Inheritance loans are not actually loans, but advances, against the assets of an estate. Usually, they are advances made with the real property in the estate as collateral, but other assets may serve as collateral under some circumstances.

Can you get inheritance advances before a death?

Maybe. However, it would not actually be an inheritance advance. Some families establish trusts during the lifetime of the person establishing the trust. In those instances, you may be able to get a trust advance before the person dies. However, for a true estate advance, which depends on assets being distributed after death, an estate must be in probate or a trust in administration before you can get a advance. There are no inheritance advances based on the idea that you might be named an heir.