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Received an Inheritance? Your Complete Legal & Financial Guide (UK)

· 34 min

Note: The following scenario is fictional and used for illustration.

Emma, 42, received a letter from her late mother's solicitor informing her she'd inherited £85,000—her share of the family home sale plus savings. She was grieving, overwhelmed, and had no idea what to do next. Should she pay off her mortgage immediately? Invest it? Put it in savings? Did she owe tax on it? Would it affect her tax credits? The questions paralyzed her for weeks.

Emma's situation is increasingly common. According to the Office for National Statistics, those aged 55-64 are most likely to receive inheritances, with the median inheritance expected to reach £107,000 for those born in the 1970s and £136,000 for those born in the 1980s. Yet most people receive this windfall during emotionally vulnerable times with little guidance on the legal requirements, tax implications, or smart financial strategies.

This complete guide walks you through everything you need to know when you've received an inheritance in the UK—from understanding the probate process and tax obligations to making informed decisions that honour both your loved one's legacy and your own financial future.

Table of Contents

Understanding the Probate Process: When and How You'll Receive Your Inheritance

The wait for your inheritance begins the moment probate starts. Understanding this legal process helps set realistic expectations and reduces the frustration many beneficiaries experience.

Probate is the legal process that confirms the executor's authority to administer the deceased's estate. The executor must apply for a grant of probate (if there's a will) or letters of administration (if there isn't), value all estate assets, pay outstanding debts and any Inheritance Tax, then distribute what remains to beneficiaries.

According to GOV.UK, probate processing times have improved dramatically in 2025. Average wait times in December 2024 dropped to just over four weeks, down from twelve weeks at the end of 2023. Around 80 per cent of grant applications are now completed online, with digital applications taking on average just over two weeks to complete. Even paper applications have seen significant improvements, with waiting times reducing from just over 22 weeks to under 15 weeks.

However, receiving the grant of probate doesn't mean you'll get your inheritance immediately. The typical timeline from death to final distribution is 6-12 months, though simple estates may be faster and complex estates considerably longer.

David's father died in March 2025. The executor applied for probate online in April. With digital processing improvements, the grant was issued in 3 weeks. However, David didn't receive his £45,000 inheritance until November—9 months after death—because the estate included property that needed selling, multiple bank accounts to close, and final tax returns to file.

Several factors can extend the timeline beyond the probate grant. Property sales typically take 3-6 months from listing to completion. If the estate includes business assets, foreign property, or investments that need liquidating, distribution delays. Banks usually release funds within 2-6 weeks after receiving probate documentation, but some financial institutions move more slowly than others.

Contested wills add months or years to the process. If someone challenges the will's validity or makes a claim under the Inheritance (Provision for Family and Dependants) Act 1975, executors typically freeze distributions until disputes resolve. Multiple properties in different jurisdictions, international assets, or complicated trust arrangements all extend administration periods.

The executor has no legal deadline for distribution. They must complete administration properly, which means taking time to ensure all debts are paid, all assets collected, and all tax obligations met. Rushing distributions exposes executors to personal liability if unexpected debts or claims emerge later.

Your patience during probate, while frustrating, protects you. A thorough administration means you receive your full entitlement without risk of clawback if the executor miscalculated.

Can You Request an Interim Payment? What Executors Can (and Can't) Do

When you're waiting months for inheritance and facing financial pressure, an interim payment can provide relief. Understanding how these work helps you make appropriate requests without damaging your relationship with the executor.

Interim distributions allow executors to release funds before final estate settlement. According to Co-op Legal Services, this typically happens once major assets are realised and liabilities paid, though rarely before the probate grant is issued.

Crucially, executors have complete discretion over interim payments. Beneficiaries cannot legally force early distribution. The decision rests entirely with the executor, who must balance your needs against their legal duty to protect the estate.

Most executors wait at least 6 months after receiving probate before considering interim payments. This timing isn't arbitrary. Under the Inheritance (Provision for Family and Dependants) Act 1975, claims against the estate must be brought within 6 months of the grant. Executors who distribute too early risk personal liability if a successful claim later reduces the estate's value.

When executors do make interim payments, they typically retain a "slush fund" to cover unexpected liabilities. This might be 10-30% of each beneficiary's share, held back for final expenses, disputed bills, or late-emerging claims.

Sarah's grandmother's estate was valued at £320,000. After 7 months, with property sold and debts cleared, the executor made interim payments of 80% to each beneficiary. Sarah received £51,200 of her £64,000 share. The executor retained £12,800 per beneficiary to cover final legal fees, accountant costs, and any unexpected claims. Sarah received the remaining £12,800 three months later when administration completed.

If you need to request an interim payment, approach it carefully. Write to the executor explaining your circumstances without demanding or pressuring. Acknowledge their discretion and legal obligations. Legitimate reasons include urgent medical expenses, risk of home repossession, or other genuine financial hardship—not holidays or discretionary purchases.

Your request might be declined for valid reasons. The estate may have insufficient liquid assets if everything is tied up in property awaiting sale. Outstanding tax investigations, disputed valuations, or potential claims make interim distributions risky. Some executors adopt a blanket policy of no interim payments to treat all beneficiaries equally and avoid complications.

Accept the executor's decision gracefully. They're acting in their legal capacity, not their personal capacity, and their primary duty is to administer the estate correctly. Pressuring an executor rarely speeds things up and can damage family relationships during an already difficult time.

Remember that executors often work without payment or charge modest fees despite significant responsibility and time commitment. Most are doing their best in a role they never trained for, balancing complex legal duties with family dynamics and their own grief.

Inheritance Tax for Beneficiaries: What You Actually Owe (Usually Nothing)

The biggest misconception about inheriting money is that you'll owe Inheritance Tax on it. In almost all cases, you won't.

Here's the critical distinction: you don't pay tax on the inheritance itself. Any Inheritance Tax owed is paid by the estate before distribution. You receive your inheritance net of all taxes. The estate's executor handles IHT payment, not you.

Current IHT thresholds have been frozen until 2030-31. According to GOV.UK, the nil-rate band remains at £325,000, and the residence nil-rate band stays at £175,000. This means individuals can pass on up to £500,000 tax-free if their estate includes their main residence passing to direct descendants. Married couples and civil partners can combine their allowances, sheltering up to £1 million from IHT.

On estates exceeding these thresholds, IHT is charged at 40% on the amount above the threshold (or 36% if 10% or more of the estate is left to charity). However, IHT affects relatively few estates. In the tax year 2022-23, only 4.62% of UK deaths (31,500 of 683,000) resulted in an IHT charge. That's fewer than 1 in 20 estates.

James inherited his aunt's estate valued at £450,000. The estate owed IHT on £125,000 (£450,000 minus the £325,000 threshold), which equals £50,000 IHT. The executor paid this from estate funds before distribution. James received £400,000 net, with no further tax to pay on the inheritance itself.

HMRC will only contact beneficiaries directly if there are issues with the estate's IHT return or if you're named as an executor or administrator. As a straightforward beneficiary, you shouldn't receive correspondence from HMRC about the inheritance.

However, you may owe tax on income or gains from inherited assets after you receive them. If you inherit property and rent it out, you'll owe Income Tax on the rental profits. When you eventually sell inherited property or investments, you may owe Capital Gains Tax on any increase in value since the date of death.

These ongoing tax obligations are your responsibility, not the estate's. Track inherited assets carefully and understand your tax position. Income from inherited assets gets added to your other income for Income Tax purposes. Capital gains from selling inherited assets use your annual CGT allowance and may push you into higher tax brackets.

The distinction matters: inheritance itself is tax-free to you as a beneficiary, but the assets you inherit can generate taxable income or gains. Keep accurate records from the date you receive the inheritance to calculate any future tax correctly.

Inherited Property: Your Tax Obligations and Options

Inheriting property brings both opportunity and complexity. Understanding your immediate tax position and future obligations helps you make informed decisions about whether to keep, rent, or sell.

According to GOV.UK, you don't pay Stamp Duty, Income Tax, or Capital Gains Tax when you initially inherit property. Your tax-free inheritance extends to bricks and mortar just as it does to cash.

Your tax position changes when you decide what to do with the property. If you sell it immediately at or near the probate valuation, you'll likely owe no CGT because there's no gain. If you keep the property and its value increases, you'll owe CGT on the gain when you eventually sell.

Crucially, your CGT calculation uses the property's value on the date the previous owner died, not the price they originally paid. This "rebasing" to date of death value can save thousands in tax.

Louise inherited her father's house valued at £280,000 at his death. She rented it for 2 years, earning £18,000 annually. This rental income was taxable, added to her employment income for Income Tax purposes. When she sold the property for £310,000, her CGT was calculated on the £30,000 gain (£310,000 sale price minus £280,000 date of death value), not on the full sale price. She reported and paid the CGT within 60 days via the online service.

For property sales completing on or after 27 October 2021, you must report and pay any CGT due within 60 days of completion. This is significantly faster than the previous self-assessment deadline and catches many inheritors by surprise. Missing the 60-day deadline triggers penalties and interest charges.

Use the GOV.UK Capital Gains Tax on UK property service to report residential property sales. You'll need details of the property value at date of death (from the probate valuation), the sale price, allowable costs like estate agent fees and solicitor costs, and your other income for the tax year.

If the inherited property becomes your main home, you may qualify for Principal Private Residence Relief, potentially eliminating CGT entirely. You must actually live in the property as your main residence, not just intend to. If you own multiple properties, nominate which is your main residence within two years of inheriting the second property.

Your options for inherited property depend on your circumstances. Selling immediately avoids ongoing costs like council tax, insurance, and maintenance, and generates no CGT if sold at probate value. The proceeds give you flexibility to invest elsewhere or use the funds for your priorities.

Keeping as a rental property creates ongoing income but triggers Income Tax on rental profits and eventual CGT when sold. You'll need to register as a landlord, meet safety regulations, arrange insurance, and manage tenants or pay an agent. Rental income gets taxed at your marginal rate, which can be 20%, 40%, or 45% depending on your total income.

Moving into the inherited property as your main home may make sense if it's suitable for your needs and location. You'll avoid CGT on your future sale if you live there as your only or main residence, but you'll lose Principal Private Residence Relief on your current home if you have one.

If you inherit property jointly with siblings or other beneficiaries, each person's share is assessed separately for CGT. You might make different decisions—one selling their share while another keeps theirs—which requires buying out co-owners or selling the property and dividing proceeds.

Get a professional RICS valuation if the property sells within months of death for significantly more than the probate valuation. HMRC may challenge the estate's valuation and recalculate IHT, potentially affecting all beneficiaries. A defensible probate valuation protects everyone.

How Inheritance Affects Benefits: Universal Credit, Pension Credit, and Means-Tested Support

If you're receiving means-tested benefits, inheriting even a modest sum can significantly affect your entitlement. Understanding the thresholds and reporting requirements protects you from losing critical support or, worse, being accused of fraud.

Universal Credit operates on strict capital thresholds. According to GOV.UK, if your total savings exceed £6,000 after receiving your inheritance, your Universal Credit payments will reduce. For every £250 above £6,000, your monthly payment decreases by £4.35. If your capital reaches £16,000 or more, you become completely ineligible for Universal Credit.

The calculation is precise. If you have £10,000 in savings after inheritance, you have £4,000 above the £6,000 threshold. This equals 16 portions of £250. Your monthly Universal Credit reduces by 16 times £4.35, which equals £69.60 per month.

These thresholds affect other means-tested benefits similarly, including Housing Benefit, Council Tax Support, and Pension Credit. Each benefit has specific capital rules, but the principle remains consistent: significant savings reduce or eliminate entitlement.

Marcus, on Universal Credit, inherited £22,000. He reported it immediately via his journal as required. Because this exceeded the £16,000 limit, his Universal Credit stopped from the next assessment period. After 18 months, having used the inheritance for living costs and emergency car repairs, his savings fell to £9,000. He successfully reclaimed Universal Credit at a reduced rate of £69.60 less per month than his previous full payment.

Crucially, inheritance counts as capital from the date of death, even if you haven't received it yet. Inherited property counts as capital from the date of death, not from when probate completes or the property sells. Your beneficial interest in the estate—your legal right to receive the inheritance—is assessable capital.

You must report inheritance as a change of circumstances immediately. Don't wait until the money arrives in your account. Report it when you become aware you're entitled to inherit, typically when you receive the will or the executor contacts you. Failing to report a change of circumstances is fraud, even if you're waiting for probate to complete.

The "notional capital" rule prevents gaming the system. If you deliberately spend or give away inheritance to remain under the £16,000 threshold, the Department for Work and Pensions can treat you as still having that capital. Spending £20,000 on a holiday or gifting it to family members to keep Universal Credit is fraud and can result in prosecution, benefit repayment demands, and criminal records.

Legitimate spending on essential items doesn't trigger notional capital rules. Using inheritance to pay off debts, replace a broken boiler, or buy essential household items is acceptable. The distinction lies in whether you're deliberately depriving yourself of capital to claim benefits or making normal life purchases.

Some capital may be disregarded temporarily. Property you plan to move into as your main home may not count immediately, giving you time to sell your current home and relocate. Property you're actively trying to sell may be disregarded for up to 26 weeks. Seek advice from Citizens Advice or a benefits specialist if your inheritance includes property and you're on benefits.

The harsh reality is that inheriting more than £16,000 while on Universal Credit creates a cliff edge. Your benefits stop entirely, even if the inheritance doesn't generate income. If you're in this situation, the inheritance must support you until it depletes below the thresholds or until you find work.

However, this can be an opportunity. An inheritance of £20,000-30,000, while eliminating benefits, might fund retraining, professional qualifications, or starting a small business that generates long-term income. Use the breathing space wisely to improve your financial position beyond what benefits provided.

Never hide inheritance from the DWP. The risk of prosecution, repayment demands, and losing benefits permanently far outweighs any short-term gain. Benefits fraud is a criminal offence with serious consequences. Report honestly and seek advice on managing the transition.

Financial Protection: FSCS Limits and Safeguarding Your Inheritance

Receiving a large inheritance suddenly exposes you to banking risk you may never have considered. Understanding Financial Services Compensation Scheme protection is crucial for safeguarding your windfall.

From 1 December 2025, the FSCS limit increased to £120,000 per person per authorised firm, up from the previous £85,000. This means if your bank fails, FSCS protects deposits up to £120,000. Anything above that limit is at risk.

For inheritance recipients, special rules apply. Temporary High Balance protection covers up to £1.4 million for 6 months for qualifying life events, including inheritance. This increased from £1 million when the standard limit rose to £120,000.

The 6-month window starts when funds first become legally transferable to you—typically when probate is granted and the executor releases your inheritance, not when someone dies. This temporary protection gives you breathing space to research investment options, seek financial advice, and spread funds across multiple institutions without immediate risk.

Rachel inherited £350,000 in August 2025. She immediately benefited from £1.4 million temporary protection for 6 months, covering her entire inheritance until February 2026. During this period, she developed a protection strategy: £120,000 in Bank A (FSCS-protected under standard limit), £120,000 in Bank B (a different banking group, separately protected), £110,000 in NS&I Premium Bonds (separately protected by the Treasury), £50,000 to pay off her mortgage, and £50,000 allocated for financial advice and pension contribution. By February 2026, no single institution held more than the standard £120,000 limit, and her inheritance was fully protected.

The banking group trap catches many inheritors. Multiple brands operating under the same banking licence count as a single institution for FSCS purposes. HSBC and First Direct share a licence, as do Lloyds, Halifax, and Bank of Scotland. Splitting £240,000 between Lloyds and Halifax gives you no extra protection—it's all under one £120,000 limit.

Check the FSCS website's bank checker tool to verify which institutions have separate licences before spreading your inheritance. Unexpected relationships exist: Santander and Cahoot share a licence, as do Bank of Scotland and Birmingham Midshires.

For joint accounts, each person gets separate £120,000 protection, so a joint account benefits from £240,000 FSCS coverage. If you inherit jointly with a spouse, keeping funds in a joint account doubles your protection while you decide what to do.

Temporary High Balance protection doesn't extend indefinitely. After 6 months, standard limits apply. Don't assume you're covered forever. Use the initial protection period to develop a long-term strategy, whether that's spreading across multiple banks, investing in assets outside the banking system, or purchasing property.

Some assets sit outside the banking system entirely and don't count against FSCS limits. NS&I products (Premium Bonds, Income Bonds, Direct Saver) are backed by HM Treasury with 100% protection for any amount. This makes NS&I attractive for holding large sums temporarily, though interest rates may be less competitive than high-street banks.

Investments like stocks and shares ISAs, general investment accounts, and pension contributions move money outside deposit protection into investment protection. The FSCS protects investments differently—up to £85,000 if the investment firm fails, though investment values themselves aren't protected (they can go up or down).

Property purchases move money entirely out of the banking system into real estate. If you're planning to buy a house, paying deposits and completion costs depletes your banked inheritance and eliminates the FSCS concern for those funds.

While funds remain with solicitors during probate in client accounts, different protection rules may apply. Client accounts often have separate FSCS protection or professional indemnity insurance. Check with the executor's solicitor if you're concerned about protection during estate administration.

The key is conscious planning. Inheriting £200,000 and leaving it all in one current account exposes £80,000 to risk (the amount over £120,000). Spreading across two separately licensed institutions protects the full amount. Factor FSCS limits into your decision-making alongside interest rates, access requirements, and investment goals.

Smart Money Moves: Priority Actions for Your Inheritance

When a significant sum arrives in your account, the temptation to make immediate decisions is strong. Fighting this urge and following a structured priority system maximizes your inheritance's long-term value.

Priority 1: Clear high-interest debt. Credit cards charging 20-25% APR, personal loans at 8-15%, and expensive overdrafts should be your first target. No investment reliably beats the guaranteed "return" of eliminating high-interest debt.

If you're paying £8,000 on a credit card at 23% APR, you're losing £1,840 annually in interest. Paying it off with inheritance money gives you an immediate, risk-free 23% return—far better than any savings account or investment.

Don't touch low-interest debt first. A mortgage at 2-4% or student loan at 1-2% charges less than you can potentially earn elsewhere. These can wait while you handle higher priorities.

Priority 2: Build an emergency fund. Before investing a penny, establish 3-6 months of household expenses in an instant-access savings account. This financial cushion prevents you from going into debt when the boiler breaks, the car needs repairs, or you face unexpected costs.

Calculate your monthly essential spending—mortgage or rent, utilities, food, transport, insurance. Multiply by three for a minimal emergency fund or six for greater security. Park this amount in an easy-access savings account, even if interest rates are modest. The purpose isn't growth; it's protection.

Priority 3: Mortgage considerations. Whether to pay off or pay down your mortgage depends on several factors. The advantages include saving thousands in interest over the mortgage term, psychological relief of reduced or eliminated housing debt, and improved monthly cash flow.

However, early repayment charges on fixed-rate mortgages can be substantial—sometimes 1-5% of the outstanding balance. Check your mortgage terms before making lump sum payments. Most mortgages allow 10% overpayment annually without penalties, which might be a middle ground.

The opportunity cost matters. If your mortgage charges 3% and you could earn 5% in a cash ISA, you're mathematically better off investing. However, guaranteed savings from mortgage repayment may appeal more than uncertain investment returns, and the psychological benefit of owning your home outright has value beyond pure mathematics.

Money paid into your mortgage is locked in property, reducing liquidity. If you might need access to funds for emergencies or opportunities, keeping some inheritance liquid makes sense even if it means carrying a mortgage longer.

Priority 4: Pension contributions. According to GOV.UK, the annual allowance for pension contributions in 2024-25 is £60,000. Contributing to your pension provides immediate tax relief—20%, 40%, or 45% depending on your income tax band—and protects the money from Inheritance Tax on your future estate.

A £40,000 pension contribution by a higher-rate taxpayer effectively costs £24,000 after tax relief, yet provides £40,000 in your pension pot. That's a 67% immediate boost. Money in pensions usually sits outside your estate for IHT purposes, meaning it can pass to beneficiaries tax-efficiently.

The tradeoff is access. You cannot touch pension money until age 55 (rising to 57 in 2028). If you need flexibility or might want the funds before retirement, pensions aren't suitable for your entire inheritance.

Priority 5: ISA protection. The £20,000 annual ISA allowance shelters investment growth from Income Tax and Capital Gains Tax. You can't put your entire inheritance into an ISA immediately, but you can maximize the allowance each tax year.

Develop a multi-year strategy to gradually move inheritance into ISA wrappers. In April 2026, contribute £20,000. In April 2027, another £20,000. Over five years, you can shelter £100,000 of growth from tax entirely.

Cash ISAs suit money you'll need within 5 years. Stocks and shares ISAs are for longer-term money you can afford to see fluctuate. Don't put your emergency fund in a stocks and shares ISA where a market drop could reduce it exactly when you need it.

Priority 6: Longer-term investing. Only after you've cleared expensive debt, built an emergency fund, and considered pensions and ISAs should you explore investing. Investment carries risk. Stock markets fluctuate. You could lose money, especially over short periods.

A 5-year minimum timeframe is essential for investing in stocks and shares. If you might need the money sooner, keep it in cash savings even if returns are lower. The risk of needing to sell investments during a market downturn can wipe out years of gains.

Tom inherited £65,000. He followed a structured approach: First, he paid off £8,000 credit card debt at 23% APR, saving £1,840 annually in interest. Second, he created a £12,000 emergency fund (4 months expenses) in an easy-access savings account. Third, he kept £15,000 in cash for planned home renovations within 18 months. Fourth, he contributed £20,000 to his pension, receiving £5,000 tax relief for a total £25,000 in his pension pot, protected for his future estate. Finally, he invested £10,000 in a stocks and shares ISA for long-term growth he won't touch for at least 10 years.

Common mistakes to avoid include emotional spending during grief—buying items to cope with loss that you'll regret later. Don't rush into unfamiliar investments, especially if advisers pressure you. Ignore high-interest debt at your financial peril; the interest bleeds value daily. Avoid making irreversible decisions too quickly; park funds safely while you grieve and research options.

The "take time" principle matters. Inheriting money doesn't create urgency unless you have critical debts. Park funds in high-interest savings protected by FSCS for 3-6 months while grieving. Research options thoroughly. Seek advice. Make considered decisions from a calm emotional place, not from grief, pressure, or excitement.

Your inheritance honours someone's life and their choice to provide for you. Stewarding it wisely honours their memory and secures your financial future.

When to Get Professional Advice (and What It Costs)

Knowing when you can manage inheritance decisions yourself versus when professional guidance is essential can save you thousands in tax and costly mistakes.

DIY is appropriate for straightforward cash inheritances under £30,000 with clear uses like paying off debt or building an emergency fund. If you're comfortable with basic financial concepts, have no complex tax position, and the inheritance doesn't push you into higher tax brackets or affect benefits, you can likely manage without professional help.

Professional advice becomes essential for inheritances over £50,000, especially with complex asset mixes like property plus investments plus pensions. If you're on benefits and inheritance affects entitlement, specialist benefits advice prevents costly errors. Tax planning needs arise when inheritance generates ongoing income or significant capital gains. Business assets, foreign property, or trust arrangements require specialist solicitor or accountant guidance.

Several types of advisers serve different needs. Independent Financial Advisers (IFAs) have access to the whole market and can recommend any financial product. Chartered Financial Planners hold higher qualifications and often work with more complex cases. Solicitors provide advice on property inheritance, trust issues, and legal structures. Accountants specialize in tax planning, especially for rental property or business asset inheritance.

Fee structures vary. Percentage-based fees typically run 1-3% of assets managed annually, which can become expensive on large inheritances. A £200,000 inheritance with a 2% annual management fee costs £4,000 per year. Fixed-fee advice for inheritance planning ranges from £1,500-£5,000 depending on complexity and your location. Hourly rates for specialists run £150-£400 per hour.

Understand what you're paying for. Initial advice covering your full financial position, inheritance integration, tax planning, and implementation strategy justifies higher fixed fees. Ongoing portfolio management justifies annual percentage fees only if you're receiving active management, regular reviews, and rebalancing. Don't pay ongoing fees for a "set and forget" investment you could manage yourself.

Jenny inherited £180,000, including £120,000 from property sale plus £60,000 in shares. She paid £2,500 for fixed-fee advice from a Chartered Financial Planner who helped her understand the CGT position on inherited shares, create a tax-efficient drawdown strategy, allocate between ISAs and pension contributions, and plan for IHT on her own estate. The advice saved an estimated £12,000 in unnecessary tax over 3 years—a fivefold return on the advice fee.

Warning signs of unsuitable advisers include pushing high-risk or complex products you don't understand, pressing you to invest quickly without time to consider, earning large commissions from specific products they recommend, or lacking clear FCA regulation.

If it sounds too good to be true, it is. Guaranteed high returns with no risk don't exist. "Special opportunities" that require immediate decisions are usually sales pressure. Advisers who can't explain products in plain language aren't suitable for your needs.

Many IFAs offer free 30-60 minute discovery calls to assess whether you need advice and whether you're a good fit for their services. Use these consultations to interview advisers, understand their approach, clarify fees, and check their qualifications.

MoneyHelper.org.uk offers free, impartial guidance and can help find regulated advisers in your area. Their guidance is free and not influenced by product sales. They can't recommend specific products but can educate you on options and considerations.

Always verify advisers are FCA-regulated at register.fca.org.uk before engaging them. Check for complaints history and ensure their permissions cover the advice you need. Unregulated advisers offer no protection if things go wrong.

The value of good advice isn't just avoiding tax or maximizing returns. It's confidence in your decisions, avoiding costly mistakes, and having an expert to ask questions as your circumstances change. For significant inheritances, professional advice often pays for itself many times over.

Your Own Will: Why Inheritance Recipients Must Plan Ahead

The irony is striking: those who've just experienced receiving an inheritance often don't have their own will in place. Yet going through the probate process firsthand reveals exactly why you need one.

Receiving an inheritance teaches crucial lessons. You've experienced the complexity of probate—the paperwork, delays, and decisions executors face. You've seen the importance of a clear will that makes the executor's job straightforward rather than burdensome. You've witnessed the emotional burden on family members during grief, and you understand how professional executor guidance or well-drafted wills reduce this stress.

Without your own will, everything you've learned becomes meaningless for your own family. Intestacy rules apply—rigid legal formulas that ignore your wishes, relationships, and circumstances. The inheritance you received could go to unintended beneficiaries. Your family faces the same stress, delays, and uncertainty you experienced.

After receiving her £85,000 inheritance and experiencing the 11-month probate process, Emma realized she had no will herself. If she died, her inheritance plus her own assets (now totalling £140,000) would go entirely to her parents under intestacy rules. Her unmarried partner of 6 years would inherit nothing, despite sharing a home and life with her. Emma created her will within 2 weeks of receiving her inheritance, naming her partner as her primary beneficiary and her parents as backup.

Your will protects the inheritance you've just received. You've invested time researching how to use this money wisely—whether paying off debt, contributing to pensions, or buying property. A will ensures these assets go to people you choose, in proportions you decide, not according to rigid legal formulas.

Major asset changes like receiving substantial inheritance may require updating an existing will. If your estate previously sat comfortably under the IHT threshold but inheritance pushes you over, you need tax planning. If you've used inheritance to buy property, your will should address who inherits it and whether beneficiaries can live there.

According to ONS data, median inheritances are rising for younger generations, with those aged 55-64 most likely to receive them. Yet many recipients don't update their estate planning, leaving their increased wealth unprotected.

If inheritance provides financial security for children, naming guardians becomes even more critical. You can now afford to provide for your children's future, but without named guardians, courts decide who raises them if you die. The inheritance you're carefully managing could end up administered by guardians you'd never have chosen.

Having experienced probate complexity firsthand, you understand the value of clear, legally sound documentation. You know how ambiguous wills create disputes. You've seen how outdated beneficiary information causes problems. You recognize that professional executor appointments can relieve family members of administrative burden during grief.

Creating your will now, while probate experiences are fresh, ensures you don't inflict the same challenges on your beneficiaries. You can choose guardians confidently, knowing you're protecting your children's futures. You can name executors who understand finances and legal processes. You can leave clear instructions that prevent family disputes.

The emotional connection matters. Someone cared enough about you to include you in their will and provide for your future. Honour that legacy by ensuring your own loved ones receive the same care and consideration. Break the cycle of procrastination. Don't let your family face intestacy and probate complications when you've just experienced firsthand how difficult they are.

Frequently Asked Questions

Q: Do I have to pay tax on an inheritance in the UK?

A: No, you don't pay tax on the inheritance itself. Any Inheritance Tax owed is paid by the estate before you receive your inheritance. However, you may owe Income Tax on profits from inherited assets (like rental income from property) and Capital Gains Tax when you sell inherited property or investments.

Q: How long does it take to receive an inheritance after someone dies?

A: The typical timeline is 6-12 months from the date of death, though it can take longer for complex estates. As of 2025, probate grants now take around 4-5 weeks to process (down from 12 weeks in 2023). Banks usually release funds within 2-6 weeks after receiving probate documentation.

Q: Can I request an interim payment before probate is complete?

A: Yes, executors can make interim distributions before final estate settlement, though they're not legally required to. This typically happens once major assets are realised and liabilities paid. Most executors wait at least 6 months after receiving probate to allow time for potential claims against the estate.

Q: Will my inheritance affect my Universal Credit or benefits?

A: Yes, if you're on means-tested benefits. If your total savings exceed £6,000 after receiving inheritance, your Universal Credit payments will reduce by £4.35 for every £250 over £6,000. Having £16,000 or more makes you ineligible for Universal Credit entirely. You must report inheritance as a change of circumstances immediately.

Q: What should I do first when I receive a large inheritance?

A: Take time before making major decisions, especially while grieving. Priority steps: pay off high-interest debt (credit cards, personal loans), build a 3-month emergency fund, protect up to £120,000 under FSCS (or £1.4 million temporary high balance protection for 6 months), and seek professional financial advice before investing or making large purchases.

Q: Do I pay Capital Gains Tax on inherited property?

A: Not when you inherit it initially. You only pay Capital Gains Tax if you later sell the property and make a profit. The taxable gain is calculated from the property's value on the date the previous owner died, not the original purchase price. You must report and pay CGT within 60 days of completion (for sales after 27 October 2021).

Q: Can I protect my inheritance from affecting my future estate?

A: Yes, but be strategic. Money in pensions is usually exempt from Inheritance Tax, so contributing up to £60,000 annually (2024/25 tax year) can be tax-efficient. ISAs protect investment growth from Income and Capital Gains Tax (£20,000 annual allowance). However, both ISAs and cash savings count toward your estate for IHT purposes.

Conclusion

Receiving an inheritance brings both opportunity and responsibility during an emotionally complex time. Understanding the legal requirements, tax implications, and smart financial strategies helps you honour your loved one's legacy while securing your own future.

Key takeaways:

  • You don't pay tax on inheritance itself—any IHT is paid by the estate before you receive funds
  • Typical timeline is 6-12 months, though probate processing has improved significantly (now 4-5 weeks for digital applications)
  • Inheritance affects means-tested benefits: report immediately if you're on Universal Credit or other support
  • Prioritize financial decisions: high-interest debt first, then emergency fund, then strategic investing or pension contributions
  • Having experienced inheritance complexity firsthand, ensure your own beneficiaries won't face the same stress—create or update your will

Receiving an inheritance is a profound responsibility—honouring a loved one's legacy while securing your own financial future. The clarity you gain from this experience makes it the perfect time to ensure your own estate planning is in order, giving your family the same gift of preparedness when the time comes.

Need Help with Your Will?

Understanding how to manage an inheritance highlights the importance of having your own will in place. Having experienced the probate process firsthand, you know exactly why clear documentation matters for your beneficiaries.

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Legal Disclaimer: This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated financial adviser. Unless stated otherwise, information relates to England and Wales.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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