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Inheritance advances

An inheritance advance is a financial arrangement that allows an heir to access a portion of their inheritance before the estate is settled. By utilizing this option, you are gifting a part of your legacy to your heirs while still alive, and ensuring that they receive the monetary benefit during your lifetime.

What is an inheritance advance?

An inheritance advance allows you to give one or more of your heirs advances on the inheritance while you live. That is, the heir receives part of his legacy, while the heir ( the one inherited after ) is still alive.

An inheritance advance can only be given to one’s heirs. This means, for example, that you cannot give inheritance advances to your grandchildren if your children are still alive unless you have put your grandchildren in a will, and they are therefore heirs after you.

An inheritance advance is typically used if, for example, you have multiple children and there is a need to help one of them financially, but at the same time you do not want to, that a difference must be made between the children. 

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How do I give an inheritance advance?

Although there are no formal requirements in the inheritance law to provide an inheritance advance, it is generally recommended that a written agreement on inheritance advance ( inheritance advance contract ) be drawn up. This is because otherwise it is easy to doubt whether this is an inheritance advance or a gift. In such questions of doubt, a judge without evidence to the contrary will assume that it is a gift.

For example, it may be a problem if the donor of the inheritance advance has just chosen to give an inheritance advance over a gift letter to avoid discrimination in the division of inheritance, once the giver goes away. If the amount is considered a gift, it will not be deducted when the giver goes away and the inheritance must be distributed. It could thus provide an unintended benefit to the recipient of the inheritance advance.

 

What is the difference between an inheritance advance and a gift?

The main difference between a gift and an inheritance advance is that the inheritance advance will be deducted from the inheritance to which the recipient of the inheritance advance would be entitled. That way you can put all your heirs right in the end, as they will all receive equal inheritance after you. If you want to give a gift, making a gift letter will be an advantage. 

 

Why should I make a inheritance advance agreement?

If you are to give an inheritance advance to a person, a written inheritance advance agreement provides a number of benefits for both the inheritance ( the person leaving the inheritance ) and the heir:

  • It acts as documentation ( proof ) that it is an inheritance advance and, for example, not a gift given

  • It determines the terms of the inheritance advance, including who is to pay any gift tax ( see below ).

  • It provides inheritance ( the person leaving the inheritance ) to decide that the inheritance advance should be the recipient’s special ownership. This means that if the recipient is – or later becomes – married, the inheritance advance should not be shared with any spouse by separation or divorce.

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