When Should You Consider Applying for Early Inheritance?
Key Takeaways:
- To Prevent Stalling: If you cannot afford the legal or filing fees required to actually start the probate process.
- To Protect Estate Value: If a property needs urgent repairs or maintenance before it can be sold or insured.
- To Settle Urgent Debts: To clear the deceased’s outstanding bills or taxes that are accruing interest.
- To Relieve Personal Strain: If the cost-of-living crisis means you cannot wait the 6–12 months it typically takes for an estate to settle.
- When there is no cash in the Estate to cover expenses: sometimes the executor is faced with limited to no cash with all of the estate’s value tied up in real estate or superannuation. Early advance can unlock some of this asset value to cover bills.
- For personal expenses: use your inheritance share to pay down your mortgage, or help with a loan or personal debts without waiting another 6-12 months to access cash.
- What about financially dependent beneficiaries?: A financially dependent beneficiary can apply for early release.
Early access isn’t just about getting your money sooner; it’s a strategic tool that helps you fulfil your duties as an executor or beneficiary without personal financial risk.
With Australia’s ageing population and pressures such as skyrocketing property prices, a rising cost of living, and sky-high medical costs, early inheritance is definitely becoming more common. That said, early inheritance still requires expert advice and consideration of potential implications.
What types of pre-probate early inheritance are there?
Inheritance advance
This is the main type of early inheritance we’re talking about. Inheritance advances are a financial product in which a third party, like JustFund, gives you a portion of your expected share, usually up to 50%, for a fee. The loan does not have to be repaid until the assets from the estate are disbursed.
Interim distributions
These are provisional payments made by an executor to a beneficiary with an urgent need, like housing or medical bills. Again, this payment is made before final accounts or probate is settled.
Small estate releases
If the deceased had a low-value bank account, some banks may release its funds to the next of kin upon simply seeing a death certificate and will, without any need for a formal Grant of Probate.
Superannuation death benefits
The funds held in your loved one’s superannuation often bypass the probate process and will be distributed in their entirety, which means a much faster distribution to nominated dependents.
Could the money help with housing costs?
Today, the housing markets across Australia are expensive. Rising property prices make it difficult to break into the housing market. Early inheritance is a great way to access the money you need for a deposit, to prevent a mortgage default, or to help with loan debt. Early inheritance is also a good way to help you secure stable housing if you have been living with your deceased relative up to this point.
Apply now for a loan to help you pay estate costs, or to help you with bills or a mortgage.
Will it attract tax implications?
If you receive an early inheritance in the form of an asset transfer, such as a house, it may have tax implications. If the deceased transferred a residential property to you in accordance with a will, there is an exemption from stamp duty. This is an exemption that wouldn’t be available when all parties are alive. There is also rollover relief from capital gains tax if an asset is transferred in accordance with a will.
To find out more about tax implications, check out our guide on how to get early access to your inheritance.
Could it cover medical or educational expenses?
If you need a cash sum to pay for expensive medical costs like emergency expenses, ongoing treatment, prescription medicines, medical equipment, rehabilitation costs, or educational costs like tuition costs, school supplies, extracurricular activity costs, specialised educational costs, or general student living expenses, a specialised estate loan is the fastest and easier way to get approval for an early inheritance request in these instances.
Could it cause family drama?
Early inheritance is definitely a very helpful option for many families. But what about siblings and other beneficiaries? Though you may have urgent expenses, family dynamics in early inheritance after death can mean siblings feel like they aren’t getting treated equally so it is important to notify them of your wishes.
An estate loan won’t change the outcome of the will – it simply enables you to receive your portion of the estate a little earlier, and the loan is repaid from your share only. If you’re considering applying for early inheritance, it may be a good idea to discuss these potential issues with the other beneficiaries and seek legal advice if you feel you need it – unresolved matters could create expensive legal disputes in the future.
If you need more capital to pay estate costs before probate is completed, see how our estate loans can help.
What about financially dependent beneficiaries?
If a beneficiary was financially dependent on the deceased in any way, this person may apply for an early release of funds to cover their basic living costs until the estate is finalised and probate is completed.
What about debts?
If the deceased has high-interest debts or urgent mortgage repayments, a different early distribution may be planned to cover these and prevent further financial loss to the estate and beneficiaries. This can also affect your access to early inheritance.
Conclusion
Visit us at JustFund.com.au for more information and to find out what you are eligible for. Contact us today to learn how we can help you and find out more about our estate services.
