An inheritance advance is preferable to an inheritance loan because there's no interest and you don't need to pay the money back. If you borrow money from a lender, you'll make monthly payments, likely at an interest rate based on your credit history.
There are a lot of challenges throughout the entire process. First of all, it can take anywhere from 18 to 24 months and sometimes longer.
An inheritance tax is imposed on the person who is the beneficiary, and what's received is taxable but only in six states and not at the federal level. California is not one of the half-dozen states with inheritance taxes.
The answer in California depends on the parent's intent when the gift was made – more specifically, whether the parent wanted it to be an advance. The problem is determining the parent's intent after death.
To secure an inheritance advance, you'll need documents to prove that you are who you say you are and establish your claim to the inheritance money with evidence of inheritance. Inheritance advance paperwork may include: The death certificate for the person whose will you are named in.
Many people don't realize that it's possible to pass on part of their wealth to loved ones well before the end of their life. By starting an early inheritance, you can provide your heirs with financial support when they might need it most, helping them achieve financial stability and pursue their goals sooner.
Inheritance checks are generally not reported to the IRS unless they involve cash or cash equivalents exceeding $10,000. Banks and financial institutions are required to report such transactions using Form 8300. Most inheritances are paid by regular check, wire transfer, or other means that don't qualify for reporting.
Many people worry about the estate tax affecting the inheritance they pass along to their children, but it's not a reality most people will face. In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate.
With a probate loan, you'll have to pay interest on the amount of your inheritance that you borrow but it may be much less than what an advance might cost. Keep in mind that a probate loan may take longer to get approved, so there might be a wait to get the cash.
These companies provide a fixed fee for their services, which will come out of your inheritance after the estate is settled. Flat rates can range from 10% to 50% of the advance value depending on the company you choose.
For the inheritance process to begin, a will must be submitted to probate. The probate court reviews the will, authorizes an executor and legally transfers assets to beneficiaries as outlined. Before the transfer, the executor will settle any of the deceased's remaining debts.
Before an executor can provide any funds to a beneficiary, they have to ensure that all the deceased's bills, taxes, and estate administration expenses are paid. The executor must notify any known creditors of the death so those creditors can make a claim against the estate.
Depending on the probate lender, you may be offered anywhere between 25 and 75 percent of the full amount of your inheritance. The interest rate on probate loans ranges between 7 and 15 percent.
It is important to note that capital assets given during life take on the tax basis of the previous owner, when these assets are given after death, the assets are assessed at current market value. This may cause loved ones to miss out on tax benefits, such as a step-up in basis after your death.
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
A good place to deposit a large cash inheritance, at least for the short term, would be a federally insured bank or credit union. Your money won't earn much in the way of interest, but as long as you stay under the legal limits, it will be safe until you decide what to do with it.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income. Example: You inherit and deposit cash that earns interest income. Include only the interest earned in your gross income, not the inherited cash.
An inheritance tax is levied on the value of the inheritance received by the beneficiary, and it is paid by the beneficiary. There is no federal inheritance tax. Inherited assets may be taxed for residents of Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Medium inheritance ($100,000)
If you receive a larger inheritance, first consider the recommendations above—fund an emergency savings account or pay off credit cards and loans. You can also use a portion of the money to pay off all or part of your mortgage or pay down student loan debt.
Immediately after receiving an inheritance, you should notify your local Social Security office.
After a loved one passes, you can seek an inheritance advance company that provides this service, like Inheritance Funding. Traditional lenders like banks and credit unions don't offer inheritance advances. You can view the advance provider's requirements and request a consultation to determine whether you qualify.
Bottom Line. California doesn't enforce a gift tax, but you may owe a federal one. However, you can give up to $19,000 in cash or property during the 2025 tax year and up to $18,000 in the 2024 tax year without triggering a gift tax return.
While each situation is unique and other factors might influence the decision, from a tax perspective, inheriting a property is often more beneficial than receiving it as a gift. Considering the overall estate planning strategy and potential non-tax implications is crucial.