If a company has offered you cash in exchange for a portion of your inheritance, you are looking at a legal contract with real financial consequences. These agreements can be difficult to unwind once signed, and the terms vary significantly from one company to the next. Before you commit, there are questions worth asking — and answers worth getting in writing.
What Is the Total Amount the Company Will Collect from Your Inheritance?
This is the most important number in the agreement, and it is not always prominently disclosed. The company will pay you a lump sum now and collect a larger amount from your estate when probate closes. Ask for the total dollar figure the company expects to receive, not just the percentage of your inheritance they are purchasing. Then compare that number to what you are receiving today. The difference is the real cost of the transaction.
Unlike some other states, Washington law does not require companies to disclose the total costs and fees charged to the beneficiary as part of the written agreement. This means that Washington consumers need to ask for this information directly and make sure it is clearly stated in the contract before signing.
What Happens If the Estate Is Worth Less Than Expected?
Estate values are not always certain at the time an inheritance advance is made. Assets may be worth less than initially estimated, debts or taxes may reduce the available distribution, or new claims against the estate may emerge during probate. Ask the company directly: if the estate distributes less than the amount assigned to the company, who bears that loss?
Most inheritance advances are structured as non-recourse transactions, meaning the company assumes the risk of a shortfall and cannot come after you personally if the estate falls short. Washington law does not prohibit recourse clauses in inheritance purchase agreements so you should confirm in writing whether the agreement is non-recourse and what exceptions, if any, apply. Read the agreement carefully, and have an attorney review it before you sign.
What Happens If Probate Takes Longer Than Expected?
Probate timelines are unpredictable. Estates can take anywhere from several months to several years to close, depending on the complexity of the estate, disputes among heirs, and court scheduling. Some inheritance purchase agreements account for extended timelines in ways that affect the economics of the transaction. Ask whether the agreement’s terms change if probate extends beyond a certain point, and get a clear answer in writing.
Are There Fees Beyond the Purchase Price?
The gap between what you receive and what the company collects is not always the whole story. Some agreements include administrative fees, document fees, processing costs, or other charges that further reduce the net value of the transaction. Ask for a complete accounting of every cost associated with the agreement, including any fees that may be deducted from your advance or added to the company’s collection at distribution.
Should You Have an Attorney Review an Inheritance Purchase Agreement Before Signing?
Yes. These are complex legal contracts, and the companies offering them have attorneys who drafted them. You should have an attorney review the agreement before you sign. An attorney can identify provisions that are unusual, explain terms that are unclear, and help you understand what you are actually agreeing to.
This is especially important for Washington consumers, who have fewer statutory protections than their counterparts in other states, and for anyone who has already signed an agreement and has questions about what it means or whether its terms are enforceable.
What Financial Advisors and Estate Professionals Should Know
Financial advisors, estate attorneys, and other professionals who work with beneficiaries are often the first people a client asks when considering one of these agreements. The questions above can serve as a practical framework for those conversations. If a client cannot get clear answers to these questions from the company offering the advance, that itself is important information.
What If You Already Signed Without Getting These Answers?
It happens. People sign these agreements quickly, often under financial pressure and without fully understanding the terms. If that describes your situation, you are not without options.
The first step is to locate and carefully read the agreement you signed. Look for the total amount the company is entitled to collect, any recourse provisions, and any fees or costs beyond the purchase price. If you are unsure whether the agreement you signed is enforceable, whether its terms are standard, or whether you have any recourse, speaking with an attorney who has experience in this area is the right next step. If the language is unclear, that is itself a reason to speak with an attorney.
Read more in our blog: Did You Sign Away an Inheritance for Less Than It Was Worth?
Before You Sign an Inheritance Purchase Agreement
An inheritance purchase agreement is a significant financial decision made at a vulnerable moment. Taking time to ask the right questions, and to have an attorney review the contract, can make a meaningful difference in the outcome.
If you have been presented with an inheritance purchase agreement and want help understanding the terms, or if you have already signed one and have concerns, James Ware and Gleam Law’s litigation team work with consumers in matters involving these agreements. Contact us online to schedule a consultation.
