When is it Better to get Less Money Earlier than More Money Later?

Should I take more or less money? It seems like a straightforward question. However, in real life it is rarely that simple and when it comes to receiving an inheritance, there may a number of reasons the answer is not what you’d expect. The process of settling an estate can be long and complicated and depending on your circumstances it may make sense to accept less now. Ultimately if the cost of waiting exceeds your costs for taking money now, it’s a smart idea to explore your options. Here are a few situations where the cost of waiting may be too high:

  1. Financial Need. If you have an urgent financial need that cannot wait, money in the future is not much help. This could be a debt that needs to be settled, a major repair on a vehicle that’s necessary for work or money to avoid foreclosure or bankruptcy. If you find yourself in urgent need without other options, having the ability to take money sooner could be a tremendous help.
  2. Emotional challenges. Not all costs are financial and when dealing with the loss of a loved one the emotional costs can be extremely high. Probate can be a lengthy and confusing process and if you are facing conflict with family members or other beneficiaries, that cost can become unbearable. If you are facing a circumstance where the emotional challenges are overwhelming, it may be worth it to take less now.
  3. Risk. Depending on what assets an estate owns, there may be a substantial amount of price volatility. If the estate owns assets that change in value substantially, the ability to cash out of those assets early may be helpful. Not having to worry about price movements or face the risk of getting less than you anticipated may make taking less early worthwhile.
  4. Expenses. While assets are in probate, you may have to take on expenses such as attorney fees to complete the process. On top of that, there may be management or upkeep expenses associated with assets in the estate, including having to cover mortgage payments if there aren’t assets in the estate to do it. If those expenses are creating a meaningful financial burden for you, it may be worth it to collect less now and be free from the expense.

In general, if you can afford to wait, it usually makes sense to be patient. However, if you are in a position where the costs of waiting or going to exceed the costs of taking the money now, exploring an inheritance advance is a helpful option.