Probate Advance vs. Lawsuit Loan: What’s the Right Option for You?

Understanding Probate Advance

A probate advance gives you early access to part of your inheritance before the probate process is complete. Probate can take months or even years, and during that time, your funds remain inaccessible.

• Definition and purpose: A probate advance lets you receive money upfront based on your share of an estate.
• Eligibility: You must be a legal heir or beneficiary of an estate currently in probate. The funding company will check court documents to verify your rights before approval.
• Repayment: There are no monthly payments. Once probate is finalized, your inheritance is reduced by the amount of the advance plus fees.
• Common uses: Many people use probate advances to cover bills, legal costs, or debt payments while waiting for the estate to settle.

Key takeaway: Probate advances are tied only to inheritance distribution, not the outcome of a lawsuit.

Understanding Lawsuit Loan

A lawsuit loan, also known as pre-settlement funding, provides cash to plaintiffs while their legal case is still pending. It’s meant for situations where you’re waiting for your case to resolve and need funds to cover immediate expenses.

• Definition and purpose: This type of funding bridges the gap between filing a case and receiving a settlement or judgment.
• Eligibility: You must have a strong case with a high likelihood of winning. The funding company will review your attorney’s case files to assess your chances.
• Repayment: Lawsuit loans are non-recourse, meaning you only repay if you win or settle the case.
• Common uses: They are often used to cover rent or mortgage, pay medical bills, or manage living expenses during long court proceedings.

Key takeaway: A lawsuit loan is entirely dependent on your case’s success, making it different from a probate advance.

Key Differences Between Probate Advance and Lawsuit Loan

While both options give you fast access to money, they serve very different needs.

• Purpose: Probate advances give you access to inheritance funds before probate closes, while lawsuit loans cover expenses while your lawsuit is ongoing.
• Source of funds: Probate advances are tied to an estate’s value, whereas lawsuit loans are based on a potential settlement or judgment.
• Risk: Probate advances depend on estate value and timelines, while lawsuit loans are repaid only if your case is successful.
• Approval process: Probate advances require proof of inheritance rights, and lawsuit loans require a strong legal case review.

Pros and Cons of Probate Advances

Probate advances offer several benefits, but they also have drawbacks.

• Advantages: They provide quick access to cash without credit checks or monthly payments. You can use the money for any expense, from personal bills to legal fees.
• Disadvantages: Fees will reduce your final inheritance, and they’re only available to heirs or beneficiaries in probate. They can also cost more than traditional loans.

Pros and Cons of Lawsuit Loans

Lawsuit loans can be a lifeline during long legal battles, but they’re not without risks.

• Advantages: You get immediate cash to cover living or medical expenses. They’re non-recourse, so you owe nothing if you lose the case.
• Disadvantages: Interest rates can be high, reducing your final settlement. They’re only available for cases with a strong chance of winning.

How to Decide Which Option Is Right for You

The best choice depends on your situation, the source of your expected funds, and how soon you need them.

• If your funds are tied up in probate: A probate advance makes sense.
• If you’re waiting for a legal case to settle: A lawsuit loan is the better fit.
• Other considerations: Look at how long you can wait, the fees involved, and how repayment works. Talking to your attorney can also help you weigh the options and understand the risks.

Tips for Choosing a Funding Company

Picking the right funding company can make a big difference in costs and terms.

• Clear fee structure: Avoid companies that hide their charges.
• Specialization: Choose a provider that focuses on your type of funding.
• Reputation: Check reviews and ensure they have ethical practices.
• Attorney coordination: Work with companies that deal directly with your lawyer.
• No upfront costs: Reputable providers won’t require payment before approval.

Conclusion

Probate advances and lawsuit loans both offer quick access to money, but they fit different situations. Probate advances are for people waiting on inheritance funds from an estate, while lawsuit loans help cover expenses during an active legal case. The right choice depends on your needs, the timing, and where the money will come from. Always understand the terms, compare options, and speak to your attorney before making a decision.

Key takeaway: Match your funding choice to your situation—inheritance or lawsuit—and always choose a reputable company that protects your interests.

FAQs

Can I get both a probate advance and a lawsuit loan at the same time?

Yes, as long as you qualify for both and each is approved separately under its own criteria.

How quickly can I get money from a probate advance?

In many cases, you can have the funds within a few days after your inheritance rights are verified.

Are lawsuit loans available for all legal cases?

No, they’re usually limited to cases like personal injury, medical malpractice, or wrongful death with a strong chance of winning.

Will a probate advance affect my taxes?

Generally, it won’t, since it’s not considered income, but you should confirm with a tax professional.

Can my attorney refuse to work with a funding company?

Yes, if they believe the terms are not in your best interest. Choosing a reputable provider helps avoid this issue.