If you are named as a beneficiary in a will or stand to inherit through an estate, you may not have to wait until probate closes to access the value of what you’re set to receive. In many cases, an heir can sell or assign their inheritance interest to a third party before the estate is settled. But whether that’s a good idea is not a simple yes or no.
Can You Legally Sell Your Inheritance in Washington?
Every state is different. Some states, like California, specifically recognize and regulate inheritance purchase agreements, allowing beneficiaries to legally assign their interest in a pending estate to a third-party company.
Washington does not have an equivalent statute. While general legal principles allow for the assignment of property rights, Washington beneficiaries considering these agreements have fewer formal protections and less regulatory oversight than their counterparts in some other states. That gap makes it especially important for Washington consumers to understand what they are agreeing to before signing.
What Does an Inheritance Purchase Agreement Actually Transfer?
This is one of the most important things to understand. When you enter into an inheritance purchase agreement, you are selling your right to receive a portion of the estate’s distribution, not a specific dollar amount and not a specific asset. That distinction matters because estate values can change.
If the estate turns out to be worth less than expected, because of debts, taxes, contested assets, or costs of administration, the portion you sold may be worth less too. In some cases significantly less. The company purchasing your interest generally assumes that risk under most agreements, but you will have to look at the specific terms of your inheritance purchase agreement to determine how shortfalls are handled. Not all agreements are the same.
When Can’t You Sell Your Inheritance Interest?
Not every beneficiary can sell their inheritance interest, and not every estate allows for it. Situations that may limit or complicate an inheritance assignment include trust structures that restrict transfer of a beneficiary’s interest, will provisions that place conditions on distribution, estates where the beneficiary’s share is disputed or contested, and circumstances where the personal representative has not yet been appointed.
If any of these apply, the inheritance advance company may not be interested, or the agreement may face legal complications down the road. An attorney can help you understand whether your specific situation allows for this kind of transaction before you commit.
What Financial Advisors Should Know About Inheritance Purchase Agreements
Financial advisors, estate planners, and other professionals who work with beneficiaries sometimes field questions about inheritance advances from clients who need liquidity during a lengthy probate. Understanding that these are legal assignments of inheritance rights, not loans, and that they carry real legal and financial implications, can help advisors guide clients toward the right questions before anything is signed.
Before You Sign an Inheritance Purchase Agreement
Selling your inheritance interest is legally permissible in many circumstances, but permissible and advisable are not the same thing. Before entering into an inheritance purchase agreement, it is worth taking the time to fully understand how inheritance advances work and consult with an attorney with experience negotiating these agreements in your state.
If you have questions about an inheritance purchase agreement you’ve been presented with, or if you’ve already signed one and have concerns about your rights, James Ware and our Gleam Law team work with consumers in Washington in matters involving these agreements. Contact us online to schedule a consultation.
