# Inheritance Loans. How do they work? should I do it? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 17, 2014, 7:36pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557 "2014-02-17T19:36:53Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:25pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/21 "2014-02-19T16:25:43Z")
> [@t-bonham@scc.net](#): > > With all that money coming to you, you should be able to afford to use capital letters, like th grown-ups do. thanks i will keep that in mind ---
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:33pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/22 "2014-02-19T16:33:42Z")
> [@Doctor\_Jackson](#): > > Here is the other thing to consider regarding advances on inheritance/annuities - the longer the company has to wait to collect, the higher the interest/fee. Five years is a pretty long wait for a return on their investment, I would expect they would only offer you between 60% to 75% of the face value. > > ETA - As **bizerta** said, inheritance funds are different than an annuity. According to the will, what happens to the fund if you die? Does it go to your estate or is it redistributed among the remaining survivors? A cash advance or loan against those funds may not even be possible. It almost certainly is not wise. my share would be split among the remaining survivors if i were to die yes. ---
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:35pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/23 "2014-02-19T16:35:37Z")
> [@buddha\_david](#): > > Here’s a silly thought. Why don’t you try learning to become responsible with whatever income you have right now, instead of frittering away whatever fortune you have coming to you? The laws protecting your trust fund are there for a reason – five years may seem like forever now, but trust me, once you grow up you will be glad that you waited. > > (And yes, mods, this is entirely germane to the discussion, IMHO.) i do have a job and i live on my own. i just put 3,000$ into engine repairs so i can keep on being responsible. dipping into some of my money to help myself out does not seem like a very irresponsible thing to do at all IMHO. thanks for the advice though ---
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:39pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/24 "2014-02-19T16:39:39Z")
> [@usedtobe](#): > > If you ever had a Student Loan of the 4 year college variety, you know what deferred interest looks like - that loan for the first year is real expensive by the time it becomes payable. > > Can you trade the car for a cheaper (working) one which will last long enough to get you to that first disbursement? i have had fafsa loans for college but with that type of financial aid i only had to pass my classes to not have to pay off the loan. i have never dealt with any other type of student or financial aid/loan ---
**Author:** ![CarnalK](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnalk/32/486_2.png) [@CarnalK](https://boards.straightdope.com/u/CarnalK)\ **Post date:** [February 19, 2014, 4:40pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/25 "2014-02-19T16:40:53Z")
But it’s not your money yet, so “dipping into” it could be pretty irresponsible depending on how much that dipping costs you. So you put in 3 grand in and you STILL have car issues that need fixing? A monkey with a job can get a car loan and the terms are likely to be a lot less punishing than mortgaging your trust fund. Maybe it’s time to just get a new/used car. ---
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:45pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/26 "2014-02-19T16:45:56Z")
> [@wellanuff](#): > > I am not a lawyer, but I have created a couple of trusts for my family and am a trustee for a few other trusts. But I am just some guy on the internet, so take everything I write with a grain of salt. > > If the money is in a trust, the trust might have language permitting you to request some of the funds at the discretion of the trustee. If you have a legitimate need for the funds (say repairing your car so you can get to work or school, or you need the money for your education), you may be able to persuade the trustee to make a payment. The trustee may prefer to pay the funds to the car repair place or school or wherever directly, rather than simply advancing you the funds directly. > > You should ask the trustee for a copy of the trust, and for an accounting of the trust at regular intervals. They might not be required to comply, but they may do so anyways. The trust may have language that requires a periodic accounting upon the beneficiary’s request (you = beneficiary). > > If the trustee is a family member, and if they won’t give you a copy of the trust or tell you that you can’t have any of the money, try to find out who the lawyer was who set up the trust and find out if you can confirm that what the trustee is saying is correct. Sometimes if the trustee is a family member, they may not understand the trust document correctly or in full, so you might not want to take just their word for what the trust says. > > There are places that will give you an advance loan against such funds, but remember, they only do it because the make a large profit doing so, and that profit comes straight out of money that would otherwise go to you. thanks that is a very helpful reply. i am reluctant to talk to the trustee often because she charges 140$ and hour to talk about anything regarding the trust fund and funny thing being on hold or her doing research or pulling files or information counts towards that charge. and sorry apparently my lack of care for grammar and punctuation on an internet forum pisses people off lol ---
**Author:** ![filmore](https://avatars.discourse-cdn.com/v4/letter/f/7993a0/32.png) [@filmore](https://boards.straightdope.com/u/filmore)\ **Post date:** [February 19, 2014, 4:48pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/27 "2014-02-19T16:48:20Z")
Do not get a loan or an advance. That’s like putting it on your credit card. The interest will end up being a huge amount. You’ve already paid the $3000? How did you pay for that? And $3000 sounds like a lot to put into car repairs if you’re tight on cash. ---
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:49pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/28 "2014-02-19T16:49:00Z")
> [@usedtobe](#): > > As a less-than-desirable member of the credit world, allow me to say: > Sell your first born before going to people who do “advances”. > Fark had an entry re a $400 “payday loan” which was paid off, IIRC after x years and 8 THOUSAND dollars. > If you think a 20% APR credit card is expensive, you do not want to read the fine print on “advances”. > > Note: Yes, I know some tax preparers will loan on anticipated refunds - those are not what we are talking about. > > The rules for such loans are generally regulated at the state level - some states allow only so much blood, others places allow them to suck you dry. > > Start with the folks holding the trust - as mentioned, it is highly likely that the terms will not allow you to even use it as collateral. For enforcement, the testator (person whose will created the trust) may have specified that your attempt to borrow on it disqualifies you from ever getting a cent. > If you CAN use it as collateral, deal only with real banks not “Payday Loan” places. thanks man a very helpful reply. this is my first post and it is nice to educate myself in this way so if i do decide to talk to the bank or trustee about this i will have some prior knowledge. i was beginning to think this site was for people to just belittle your questions and grammar. so thanks! ---
**Author:** ![Jimmyhat4](https://avatars.discourse-cdn.com/v4/letter/j/a88e57/32.png) [@Jimmyhat4](https://boards.straightdope.com/u/Jimmyhat4)\ **Post date:** [February 19, 2014, 4:52pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/29 "2014-02-19T16:52:53Z")
> [@filmore](#): > > Do not get a loan or an advance. That’s like putting it on your credit card. The interest will end up being a huge amount. > > You’ve already paid the $3000? How did you pay for that? And $3000 sounds like a lot to put into car repairs if you’re tight on cash. yea i paid to have the cylinder and gasket fixed as well as the motor mount. my sister is already over 30 so she has access to her 24,000. she basically gave me the money that i needed for the repair when she found out that i was having trouble. we live in different states so she just wired me the money through my checking account. i promised to pay her back over time. basically i made a deal with her similar to what i would ask the bank or loan shark to do. so even though my immediate car troubles are no longer an issue i think it is still valuable to know i basically just gave her my tax return since it came in the mail today. although it did not cover what i borrowed it was a good chunk of it to pay her back fast ---
**Author:** ![Kimballkid](https://avatars.discourse-cdn.com/v4/letter/k/b5a626/32.png) [@Kimballkid](https://boards.straightdope.com/u/Kimballkid)\ **Post date:** [February 19, 2014, 5:42pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/30 "2014-02-19T17:42:57Z")
> [@Jimmyhat4](#): > > i basically just gave her my tax return since it came in the mail today. although it did not cover what i borrowed it was a good chunk of it to pay her back fast To add to the grammar pile on. 😉 You gave her your REFUND. The RETURN is what you filed to get said REFUND. 😃 ---
**Author:** ![buddha\_david](https://avatars.discourse-cdn.com/v4/letter/b/ee7513/32.png) [@buddha\_david](https://boards.straightdope.com/u/buddha_david)\ **Post date:** [February 19, 2014, 7:13pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/31 "2014-02-19T19:13:25Z")
> [@Jimmyhat4](#): > > i am reluctant to talk to the trustee often because she charges 140$ and hour to talk about anything regarding the trust fund Why is the trustee charging you money?? Unless, you’ve confused the trustee with the lawyer who created the trust (they are rarely the same person.) And BTW, $24000 may sound like a lot of money, but believe me, it’s not. I’ve known Trust Fund Kids who’ve burned through millions without any thought or care, until suddenly, they were flat broke. Good on you for getting a loan from your older sister. But I strongly advise you not to borrow anything more than that, unless you need a heart transplant or something along those lines. ---
**Author:** ![obbn](https://avatars.discourse-cdn.com/v4/letter/o/d6d6ee/32.png) [@obbn](https://boards.straightdope.com/u/obbn)\ **Post date:** [February 19, 2014, 10:18pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/32 "2014-02-19T22:18:57Z")
More than likely the reason that the person leaving you the inheritance specified that you won’t receive the funds until you reach thirty to keep you from being stupid. Most people in their twenties absolutely suck at managing large sums of money. Most would buy a car, take some trips, etc.and blow it all in a year or two. By stipulating a waiting period I’m sure they were hoping that your priorities change and you’ll be more responsible with the funds. You may very well be a responsible person, but getting an advance through one of these places is a terrible use of the money. You will loose 20 - 30% to them in fees. Plus you’ll loose another 20 -30% or more in taxes. Unless there is a very pressing need for the funds, wait the five years and get all that was left to you. Use those five years to plan what to do with those funds. If they are substantial, met with an investment advisor. I made a wheelbarrow full of money in my early twenties and blew it all before I was thirty. Looking back I wish I had been more responsible and can’t help but think how different my life would be now had I done the right thing with that money when I was younger. Instead I bought a new Porsche, dressed in the finest clothes and took incredible vacations and parties hard. I live a good life now, but a good friend of mine in the same business then was responsible, drove a Honda and invested his money. Today we are still friend zx, but he’s worth in the neighborhood of $15 million, I’m certainly not. Take my advice for what its worth. Think ahead and your older self will thank you. ---
**Author:** ![CarnalK](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnalk/32/486_2.png) [@CarnalK](https://boards.straightdope.com/u/CarnalK)\ **Post date:** [February 20, 2014, 1:20am UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/33 "2014-02-20T01:20:48Z")
When I was your age I would have been thinking the same thing as you. “But I want that money NOW!” But you have to think clearly. Your sister made it to 30 without an inheritance, so can you. Do you really want to think “Boy, I’d be screwed if my relative hadn’t died in time?”. Pretend you know the future and you’re going to win a small lottery in 5 years. Why put yourself in the position of finally waiting the five years and it’s already spent? ---
**Author:** ![UDS](https://avatars.discourse-cdn.com/v4/letter/u/ecae2f/32.png) [@UDS](https://boards.straightdope.com/u/UDS)\ **Post date:** [February 20, 2014, 1:36am UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/34 "2014-02-20T01:36:15Z")
It basically comes down to this; you’re borrowing the money to keep a car on the road. Your options are (a) borrow from your sister (which you’ve already done, and may be reluctant to do further), (b) borrow from the bank on the same terms as are available to people who don’t have an inheritance coming in five years time, or © borrow against your expected inheritance. You just need to grasp two things: First, the less you borrow, the less it will cost you. What’s the lowest possible amount you can spend, and still end up with a car which goes from A to B? Absolutely do not spend a penny more than that. And therefore do not borrow more than you need to be able to spend that amount. If this means you drive a crappy but functional car, drive a crappy but functional car. Secondly, borrowing from your sister is cheaper than borrowing from the bank (if perhaps a little exploitative), and borrowing from the bank is almost certainly cheaper - _much_ cheaper - than borrowing against your inheritance. Do not borrow against your inheritance until you have exhausted all other possible sources of funds. ---
**Author:** ![turtlescanfly](https://avatars.discourse-cdn.com/v4/letter/t/65b543/32.png) [@turtlescanfly](https://boards.straightdope.com/u/turtlescanfly)\ **Post date:** [February 20, 2014, 2:01am UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/35 "2014-02-20T02:01:56Z")
> [@Jimmyhat4](#): > > i was beginning to think this site was for people to just belittle your questions and grammar. so thanks! Well, not JUST that;) ---
**Author:** ![buddha\_david](https://avatars.discourse-cdn.com/v4/letter/b/ee7513/32.png) [@buddha\_david](https://boards.straightdope.com/u/buddha_david)\ **Post date:** [February 20, 2014, 4:20am UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/36 "2014-02-20T04:20:23Z")
> [@obbn](#): > > Most people in their twenties absolutely suck at managing large sums of money. Most would buy a car, take some trips, etc.and blow it all in a year or two. By stipulating a waiting period I’m sure they were hoping that your priorities change and you’ll be more responsible with the funds. This is soooo true. Though the OP may not realize it yet. When I turned 21, I looked back on my teenage years and thought, “Man, what an idiot I was…I’m so much smarter now!” When I turned 30, I looked back on my 20’s and thought, “Man, what an idiot I was…I’m so much smarter now!” When I turned 40, I looked back on my 30’s and thought, “Man, what an idiot I was…but at least I’m still smarter than most 50-year-olds!” 😉 ---
**Author:** ![Mosier](https://avatars.discourse-cdn.com/v4/letter/m/7ea924/32.png) [@Mosier](https://boards.straightdope.com/u/Mosier)\ **Post date:** [February 20, 2014, 6:12am UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/37 "2014-02-20T06:12:55Z")
The second part of the thread title, “should I do it?” is the important question. The correct answer is “probably not,” based on the little bit of information you have provided here. ---
**Author:** ![ALOHA\_HATER](https://avatars.discourse-cdn.com/v4/letter/a/76d3ee/32.png) [@ALOHA\_HATER](https://boards.straightdope.com/u/ALOHA_HATER)\ **Post date:** [February 20, 2014, 7:47am UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/38 "2014-02-20T07:47:02Z")
> [@Jimmyhat4](#): > > thanks that is a very helpful reply. i am reluctant to talk to the trustee often because she charges 140$ and hour to talk about anything regarding the trust fund and funny thing being on hold or her doing research or pulling files or information counts towards that charge. and sorry apparently my lack of care for grammar and punctuation on an internet forum pisses people off lol I’m at a loss here–she charges 140 an hour to talk? That’s not what a fucking trustee _does_. That’s an abuse of her position, if trustee is what she really is. Anyway, yeah. Get a regular loan from the bank where the trust account is held if you need some cash. Don’t borrow against the trust but they know your accounts and they know you’re not some guy off the street. Just make a point of talking to whoever’s really in charge without being a dick about it–you’ve got money there. Not silly money, but at least significant money. And do take care of capitalization and punctuation, for the same reason we don’t leave the house without pants in the morning. ---
**Author:** ![engineer\_comp\_geek](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/engineer_comp_geek/32/504_2.png) [@engineer\_comp\_geek](https://boards.straightdope.com/u/engineer_comp_geek)\ **Post date:** [February 20, 2014, 2:00pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/39 "2014-02-20T14:00:48Z")
**Moderator Action** While the question about exactly how inheritance loans work is factual, the second part of this (should I do it) is more of an advice and opinion question, and many of the answers are expressing advice and opinions. That makes this thread better suited to IMHO. Note that any factual aspects of the topic may still be answered there. Moving thread from General Questions to In My Humble Opinion. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [February 20, 2014, 3:11pm UTC](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557/40 "2014-02-20T15:11:10Z")
My brother in law wanted to do this about 15 years ago when he inherited money that wasn’t going to come his way for a bit, but needed the money now. In short, he couldn’t find a reputable bank that would loan him money with the inheritance as collateral. The reason - it wasn’t his money until distribution - and things could happen that would make it non-distributable (there was, for instance, a drug use clause and a criminal behavior clause - get arrested or end up in rehab and money won’t come your way). If he died before distribution, his creditors wouldn’t get the money, it would be given to the other heirs. And non reputable sources wanted usurious rates. This was a long time ago - but around 20%. [Previous page](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557.md?page=1) [Next page](https://boards.straightdope.com/t/inheritance-loans-how-do-they-work-should-i-do-it/681557.md?page=3)