{Read in 5 Minutes} As a Trusts and Estates attorney, I frequently represent Executors offering Wills for probate in the Surrogate’s Court. Incident to this, I will help the Executor fill out a petition for probate. In the petition, the petitioner needs to list the names and addresses of all of the beneficiaries to the Will, whether they are next of kin, beneficiaries, or creditors. It’s not uncommon for these companies to troll the record room of the Surrogate’s Court to get the interested parties’ information so they can solicit business from them. For example, if the Estate owns real property, the Executor might expect a slew of mail from appraisers and real estate brokers looking to help value and sell the property.
Recently, there’s been an onslaught of companies sending solicitations to beneficiaries of New York Estates. While these companies have been around for quite some time, it seems like recently they have started sending mailings. Perhaps this is because most of the Surrogate’s Court records are available online, making it easier for these companies to have quicker access to this information.
How do these companies work? While each company may be a little bit different, most of them offer to give you an advance on your inheritance immediately in exchange for assigning your bequest to them. They usually ask for a percentage or commission of the bequest, and/or — usually “and”, not “or” — charge a slew of fees. For example, maybe a beneficiary is entitled to get $50,000 under a Will. One of these companies would contact the beneficiaries and tell them in the letter that probate can often be slow and lengthy (not usually the case in New York) and that they will give you an advance on your inheritance immediately. However, not all of it. For example, for the $50,000 bequest, they may offer this beneficiary $45-, $40-, or $35,000 (or even less). The beneficiary often finds this attractive because they get the money immediately, while the company potentially makes a profit by putting up money for the promise to receive more money when probate is complete.
Are these a good idea? Well, it really depends on the situation. I personally don’t believe that probate is a terribly long process. However, it sometimes can be if the next of kin are very remotely related, or if someone files Objections to the Will, which may lead to discovery and even a jury trial. That is really a very small percentage of all cases. However, if a beneficiary is very hard up, an advance might be attractive.
Some people are of the opinion that these sorts of companies are predatory, sort of akin to what some real estate investors will do in trying to pit family members against each other to buy a valuable piece of property for a fraction of its cost. However, since these companies are relatively new in New York, there is not much out by way of legislation or consumer protection regulations.
If you receive such a letter, it might be worthwhile to discuss it with an attorney before you make a decision. Most Trusts and Estates attorneys who practice in the Surrogate’s Court regularly can give you a pretty good estimate on whether the probate process will be lengthy or quick, and whether or not there might be any aggravating factors that would delay it significantly. Another good resource is some online research. If one looks up any of these companies on trusted consumer websites, say for example, the Better Business Bureau… as of the publication of this article (November 2024), not many of them are very positive.
Finally, it’s worth it to note that everyone listed in the petition may get these letters, even if they are not getting a cash inheritance. For example, I have seen people get these letters when they receive nothing but their loved one’s ashes, or they are nominated as an alternate Executor in the Estate, or they get the loved one’s dog and the leftover kibble in the cupboard. These are things that probably can’t be advanced again, but I imagine these companies have processes whereby they collect this information somewhat indiscriminately. So, if you get a letter like this, don’t do a cartwheel just yet. There may not be any cash for you to borrow against.
For more information on this topic, please contact me.