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What Happens to Your Money When You Die? (UK Breakdown)

· 14 min

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

Emma, 42, thought she'd prepared everything. She'd saved £48,000 in her personal account, owned a £265,000 flat with her unmarried partner of 9 years, and had a workplace pension worth £120,000. When she died suddenly from a brain aneurysm, her partner Marcus discovered the harsh reality: their joint account was accessible, but Emma's personal account—where she kept money for bills and the mortgage—was frozen. Marcus couldn't access a penny for 6 months while waiting for probate. Worse, because Emma died without a will, her entire estate went to her estranged parents under UK intestacy rules. Marcus, despite sharing the flat and 9 years together, inherited nothing.

According to the Money and Pensions Service, 56% of UK adults don't have a will—and most have no idea what actually happens to their money when they die. This article breaks down exactly where your money goes, who can access it, how long it takes, and most importantly, how to make sure your money goes where you actually want it to go.

Table of Contents

What Immediately Happens to Your Money When You Die

When someone dies, their financial world stops immediately.

Bank accounts freeze the moment the bank receives notification of death. Direct debits and standing orders halt—mortgage payments, utility bills, subscription services all stop. Credit and debit cards are cancelled. For 568,613 families in England and Wales who faced this in 2024, it's a jarring reality during an already difficult time.

Sarah's mother died with £35,000 in her personal account. The bank released £15,000 for funeral costs within 3 weeks but froze the rest until probate was granted 5 months later. During those months, Sarah had to cover her mother's outstanding bills from her own savings.

But not all accounts freeze the same way.

Joint accounts with "right of survivorship" pass automatically to the surviving account holder. If you and your partner have a joint account with joint tenancy, the survivor presents the death certificate to the bank and takes full ownership. The money doesn't go through probate and isn't distributed according to the will.

Individual accounts require probate for the executor or administrator to access funds. Most banks won't release money until they see the grant of probate—the legal document proving authority to manage the estate.

There's one exception: many banks release small amounts for immediate expenses without probate. The threshold varies by institution—typically £5,000 to £50,000. This discretionary release covers funeral costs and urgent bills, but it's not guaranteed.

Most families face 3-6 months without access to the deceased's individual accounts. Bills still arrive. The mortgage payment is due. Council tax doesn't pause for grief. The practical reality is harsh: your money becomes inaccessible exactly when your family needs it most.

The Probate Process: Why Your Money Gets Frozen

Probate is the legal process that authorizes someone to distribute your estate. Think of it as the government's verification system—proof that the person claiming authority to handle your money actually has that right.

When there's a valid will, the court issues a grant of probate to the named executor. When there's no will, the court issues letters of administration to a family member (usually the spouse or closest relative) who becomes the administrator.

Why does this process exist? Probate protects estates from fraud, ensures debts are paid before distribution, and confirms executor authority. It's the legal checkpoint between death and inheritance.

But here's what surprises most people: probate is required for most estates with property, bank accounts over £5,000-£50,000 (threshold varies by institution), or stocks and shares. If your estate includes a house or substantial savings, your family will need probate.

David's father died with a will leaving everything to David. Even with a clear will, David had to wait 5 weeks for probate before he could access his father's £78,000 savings account to pay outstanding bills. The will didn't skip the process—it just made it clearer who should inherit.

The typical timeline: 4-8 weeks to obtain a grant of probate if the application is straightforward. Full estate administration usually takes 3-6 months. Complex estates with property sales, inheritance tax investigations, or disputes can stretch to 6-12 months or longer.

The probate fee in England and Wales is £300 for estates over £5,000 (no fee for smaller estates). Extra copies of the grant cost £16 each.

During probate, executors must value the entire estate, identify and pay debts and taxes, collect assets, and prepare for distribution. Your money stays frozen throughout this process—not because anyone's trying to be difficult, but because the law requires verification before anyone can touch it.

If You Die Without a Will: UK Intestacy Rules Explained

Dying without a valid will means intestacy—the law decides who inherits according to a strict hierarchy. This applies to England and Wales. Different rules apply in Scotland and Northern Ireland.

The outcomes often shock families.

If you're married or in a civil partnership with children: Your spouse receives £322,000 plus 50% of the remainder. Your children split the other 50% equally, receiving their share when they turn 18.

When Lisa, 38, died without a will, her estate was worth £500,000. Her husband received £322,000 plus 50% of the remaining £178,000 (£89,000), totalling £411,000. Their two children split the other £89,000—£44,500 each, held in trust until age 18. This wasn't what Lisa would have wanted, but intestacy doesn't ask what you wanted.

If you're married or in a civil partnership without children: Your spouse inherits everything. Straightforward, at least.

If you have no spouse but have children: Your children inherit everything equally. If a child died before you but had children of their own, those grandchildren inherit their parent's share.

If you have no spouse or children: The estate goes to parents, then siblings, then half-siblings, then grandparents, then aunts and uncles, then half-aunts and half-uncles. The hierarchy continues through increasingly distant relatives until someone qualifies.

If you're unmarried: Your partner inherits nothing. Zero. This is the most shocking intestacy outcome.

James lived with his partner Sophie for 12 years. They weren't married. When James died intestate with £200,000 in assets, Sophie inherited nothing—it all went to James's estranged brother. Among the 3.5 million cohabiting couples in the UK, most assume they're protected. They're not.

Important exceptions: Stepchildren do NOT inherit under intestacy unless legally adopted. If you're in a blended family and die without a will, your stepchildren receive nothing.

If no relatives exist: The estate passes to the Crown under bona vacantia. Your money literally goes to the government.

Intestacy follows cold legal logic. It doesn't care about your relationships, your promises, or your intentions. It applies rules written decades ago to situations those lawmakers never imagined.

If You Have a Will: How Your Money Gets Distributed

A will changes everything—except the probate timeline.

With a will, you control who gets what. You can leave money to your spouse, children, friends, charities, or anyone else. You can split your estate any way you choose. You can make specific gifts: "£10,000 to my niece for her education, the rest to my wife."

Rachel's will left £50,000 to her sister and the remainder of her £300,000 estate to her husband. Without a will, under intestacy rules, her husband would have received everything (they had no children) and her sister would have received nothing. The will honored Rachel's relationship with her sister.

You also appoint an executor—the person who manages your estate. This matters enormously. Mark's will appointed his best friend as executor instead of his unreliable brother. His estate was administered smoothly within 4 months. Without a will, the court would have appointed his brother as administrator by default.

But here's what a will doesn't do: it doesn't skip probate for most estates. If you own property or have substantial bank accounts, your executor still needs to obtain probate before distributing your estate. The process is slightly faster because your instructions are clear, but it's not eliminated.

A will also lets you set up trusts for children—controlling when and how they receive their inheritance. You can leave money to minors in trust until they reach 18, 21, or older. You can create trusts that protect assets or provide for vulnerable beneficiaries.

Most importantly, a will lets you exclude people. Unlike intestacy, which follows a fixed hierarchy, you can choose to leave nothing to relatives if that's your wish. Your will, your decision.

The key advantage: certainty. Your family knows your wishes. Your executor has clear instructions. There's no confusion, no disputes over what you "probably" wanted. Just your written word, legally binding.

What Happens to Different Types of Assets

Not all money passes through your will or follows probate rules. Different asset types have different rules.

Bank accounts: Individual accounts go through probate. Joint accounts with joint tenancy pass to the survivor automatically, bypassing probate entirely. Joint accounts with "tenants in common" ownership mean the deceased's share goes through probate.

Property: Joint tenancy means property passes to the co-owner automatically. Tenants in common means the deceased's share is distributed via will or intestacy. Sole ownership requires probate.

This matters for unmarried couples who own property together. If you're tenants in common and die without a will, your share goes to blood relatives—not your partner.

Pensions: Most pensions fall outside your estate entirely. They don't go through your will or probate. Pension scheme rules determine distribution, usually based on beneficiaries you've nominated directly with the pension provider.

Tom's £150,000 workplace pension went directly to his nominated partner within 6 weeks, bypassing probate entirely. His £80,000 in savings took 5 months to access through probate.

Tax treatment varies: defined contribution pensions can usually pass tax-free if you die before age 75. After 75, beneficiaries pay income tax at their marginal rate on withdrawals.

Life insurance: Policies written "in trust" pay directly to named beneficiaries, avoiding probate and potentially reducing inheritance tax. Policies NOT in trust form part of your estate and go through probate.

Helen's life insurance was written in trust, so her £200,000 payout went to her children immediately and wasn't counted for inheritance tax purposes. This single decision saved months of waiting and potentially £80,000 in tax.

Investments (stocks, shares, ISAs): These go through probate. ISA tax advantages end on death—the investments become part of the taxable estate.

Digital assets: Online accounts, cryptocurrencies, digital photos, and cloud storage are often overlooked. Without proper planning, these can be inaccessible. Most platforms have policies for deceased user accounts, but access requires proof of authority—usually the grant of probate.

Understanding which assets bypass probate lets you structure your finances strategically. Joint accounts and nominated pension beneficiaries provide immediate access. Individual accounts and property require the full probate process.

Who Gets Paid First: Debts, Taxes, and Creditors

Your estate pays debts before beneficiaries receive anything. This surprises many people who assume inheritance comes first.

The law establishes a strict order of payment under the Administration of Estates Act 1925:

  1. Secured debts (mortgages secured against property)
  2. Funeral expenses (reasonable costs)
  3. Probate and administration costs (legal fees, probate fees)
  4. Inheritance tax
  5. Unsecured debts (credit cards, personal loans, outstanding bills)
  6. Legacies and specific gifts (the £10,000 to your niece)
  7. Residuary estate (what's left to main beneficiaries)

If the estate can't pay all debts, creditors are paid proportionally within their priority class. Beneficiaries receive nothing.

Stuart died with £200,000 in assets but owed £180,000 on his mortgage and £30,000 in credit card debt. The secured mortgage was paid first (£180,000). The remaining £20,000 paid part of the unsecured credit card debt. His children inherited nothing. The credit card company wrote off the remaining £10,000—they couldn't pursue Stuart's children for it.

Insolvent estates occur when debts exceed assets. Beneficiaries inherit nothing, but they're not personally liable for the shortfall. Your children don't inherit your debt.

Karen's estate was worth £150,000, but she owed £160,000. The estate was insolvent. Creditors were paid proportionally from available funds. Her children inherited nothing and weren't personally responsible for the remaining £10,000 debt.

Creditors have 6 months from the grant of probate to make claims against the estate. After this period, executors can distribute assets with more confidence that no unexpected claims will arise.

This is why executors must carefully value estates and identify all debts before distributing inheritance. Distributing assets too early—before paying debts—can make executors personally liable.

Inheritance Tax: Does Your Family Pay?

Inheritance tax (IHT) is paid from the estate before distribution. Beneficiaries don't personally pay it—it's deducted from what they inherit.

Current IHT thresholds for 2025:

Nil-rate band: £325,000 tax-free on all estates. This threshold has been frozen since 2009 and remains frozen until at least 2031.

Residence nil-rate band: Additional £175,000 if you leave your home to direct descendants (children, grandchildren). Also frozen until 2031.

Combined potential allowance: Up to £500,000 per person tax-free (£1 million for married couples who combine allowances).

Tax rate: 40% on amounts above the threshold.

Margaret's estate was worth £600,000. She left her £300,000 home to her daughter and £300,000 in savings. Her IHT calculation: £600,000 minus £325,000 (nil-rate band) minus £175,000 (residence nil-rate band) equals £100,000 taxable amount. Tax owed: £100,000 × 40% = £40,000.

Her daughter inherited £560,000 after tax (£600,000 minus £40,000 IHT).

Spouse exemption: Everything left to a spouse or civil partner is tax-free. No IHT, regardless of amount. Unmarried partners receive no such exemption.

Unused allowances transfer: If your spouse died without using their full allowance, you can claim their unused portion. Peter and Jean (married) could pass up to £1 million to their children tax-free by combining their allowances (£325,000 + £175,000 each).

The residence nil-rate band taper: If your estate exceeds £2 million, the £175,000 residence allowance reduces by £1 for every £2 over the threshold. Estates worth more than £2.35 million lose the residence allowance entirely.

Charitable gifts reduce IHT: Leave 10% or more of your net estate to charity, and the IHT rate drops from 40% to 36%. This can benefit both charity and beneficiaries.

Seven-year gift rule: Gifts made more than 7 years before death are tax-free. Gifts within 7 years may be taxable on a sliding scale.

IHT must be paid before probate is granted for estates that owe it. This creates a cash flow problem: the money to pay tax is frozen in the estate. Executors often need to arrange payment from liquid assets, sell property, or arrange bridging finance.

How Long Until Beneficiaries Actually Receive Money?

The question every grieving family asks: "When do we actually get the money?"

The answer depends entirely on complexity.

Immediate access (days to weeks): Joint bank accounts with right of survivorship, life insurance in trust, and some pension death benefits bypass probate. Beneficiaries access these within days of providing a death certificate.

Small estates (2-4 weeks): Bank accounts under the discretionary release threshold (£5,000-£50,000, varies by bank) may be released for funeral costs and immediate expenses without probate.

Standard probate (3-6 months): Most estates with straightforward probate take 3-6 months from death to full distribution. This breaks down as:

  1. Death registered: Within 5 days of death
  2. Probate application prepared: 2-6 weeks to gather documentation
  3. Grant of probate issued: 4-8 weeks from application
  4. Assets collected and valued: 2-8 weeks
  5. Debts and taxes paid: 2-4 weeks
  6. Final distribution: 1-2 weeks

David's father had a simple estate with a will, no property to sell, and no IHT. Total time from death to David receiving inheritance: 4 months.

Complex estates (6-12+ months): Estates requiring property sales, inheritance tax payment, multiple beneficiaries, business valuations, or foreign assets take longer.

Emma's mother owned property that took 8 months to sell in a slow market. The estate wasn't fully distributed until 11 months after death.

Disputed estates (12-24+ months): Will contests, family disputes, and legal challenges extend the process significantly. Some disputes take years to resolve.

Interim distributions: Executors can make partial payments to beneficiaries while waiting for final asset valuations or property sales. This provides some relief during long administrations.

The harsh reality: even with a will and straightforward circumstances, most families wait 4-6 months before receiving inheritance. Without a will, add weeks or months to the timeline while the court appoints an administrator.

The freezing of accounts isn't malicious—it's legal protection. But it creates real hardship for families who need access to money for mortgages, bills, and living expenses during the most difficult period of their lives.

How to Control What Happens to Your Money

You can't avoid probate for most estates, but you can control who inherits and make the process smoother for your family.

1. Make a will This is the only way to control who inherits under intestacy rules. A will ensures your money goes where you want—not where the government decides.

2. Appoint an executor you trust Choose someone organized, reliable, and willing to take on the responsibility. They'll manage the entire estate administration process. You can appoint professional executors (solicitors) or trusted family members and friends.

3. Consider life insurance in trust Writing life insurance in trust means the payout goes directly to beneficiaries, bypassing probate and potentially saving inheritance tax. It provides immediate cash when families need it most.

4. Nominate pension beneficiaries Don't rely on your will to distribute your pension—most pensions fall outside your estate. Complete the pension provider's nomination form to ensure your pension goes to the right people.

5. Review jointly-owned assets Understand whether you own property and accounts as "joint tenants" (passes automatically to survivor) or "tenants in common" (your share goes through your will). Choose the structure that matches your intentions.

6. Keep an updated asset list Document your bank accounts, investments, insurance policies, pensions, and property. Include account numbers, provider contact details, and approximate values. This makes your executor's job dramatically easier and speeds up probate.

7. Tell your family your wishes Don't let your will be a surprise. Discuss your plans with executors and beneficiaries. Transparency prevents disputes and confusion.

8. Review regularly Life changes require will updates. Marriage, divorce, children, house purchases, and significant wealth changes all trigger the need to review your will.

After reading about intestacy rules, Sophie and Tom (unmarried, 7 years together, one child) immediately made wills leaving everything to each other. It took 15 minutes online. Sophie nominated Tom as her pension beneficiary. Tom wrote his life insurance in trust for Sophie. They spent £200 and protected their family completely.

The goal isn't to avoid probate—for most estates, that's impossible. The goal is to control distribution, speed up administration, and protect your family from uncertainty during the hardest time of their lives.

Frequently Asked Questions

Q: What happens to my bank account when I die?

A: When you die, your bank accounts are frozen until probate is granted. The executor or administrator must obtain a grant of probate to access the funds. However, some banks release small amounts (typically £5,000-£50,000) for immediate expenses like funeral costs without requiring probate first.

Q: Who gets my money if I die without a will in the UK?

A: Under UK intestacy rules for England and Wales, your money goes to your spouse or civil partner if your estate is under £322,000. If it's worth more, your spouse gets £322,000 plus 50% of the remainder, with the other 50% going to your children. If you're unmarried, your partner inherits nothing—it all goes to blood relatives or the Crown if none exist.

Q: How long does it take to access a deceased person's bank account?

A: Accessing a deceased person's bank account typically takes 3-12 months, depending on whether probate is required. Banks may release small amounts (£5,000-£50,000) within 2-4 weeks for immediate expenses. Full access requires a grant of probate, which usually takes 4-8 weeks to obtain if there are no complications.

Q: Do I have to pay inheritance tax on money I inherit?

A: You don't personally pay inheritance tax on money you inherit—it's paid from the estate before distribution. The estate pays 40% tax on amounts above £325,000 (or up to £500,000 if the deceased left a home to direct descendants). Spouses and civil partners inherit tax-free.

Q: What happens to joint bank accounts when one person dies?

A: Joint bank accounts with "joint tenancy" pass automatically to the surviving account holder by right of survivorship. The surviving owner presents the death certificate to the bank and takes full ownership. The funds don't go through probate and aren't distributed according to the will.

Q: Can creditors take money from my estate after I die?

A: Yes, creditors can claim against your estate after you die. Outstanding debts (mortgages, loans, credit cards) must be paid from your estate before any inheritance is distributed. If debts exceed assets, beneficiaries receive nothing, but they're not personally liable for the debt.

Q: What happens to my pension when I die?

A: Pensions typically pass outside your estate and will. Most pension schemes let you nominate beneficiaries who receive the funds directly. Defined contribution pensions can usually be passed on tax-free if you die before age 75, or taxed at the beneficiary's income tax rate if you die after 75.

Conclusion

Key takeaways:

  • Your money freezes when you die—most accounts require 3-6 months of probate before families can access them
  • Without a will, UK intestacy rules decide who inherits, often unfairly (unmarried partners get nothing)
  • Debts and taxes are paid first from your estate before beneficiaries receive anything
  • Having a will controls WHO gets your money but doesn't skip probate for most estates
  • Taking action now (making a will, nominating beneficiaries, setting up trusts) protects your family when they need it most

Your family will be grieving. The last thing they need is months of frozen accounts, unexpected intestacy outcomes, or confusion about your wishes. Making a will today ensures your money goes exactly where you want it to go—and gives your loved ones clarity and peace of mind when they need it most.

Need Help with Your Will?

Understanding what happens to your money after you die makes it clear why having a will matters. Whether you want to protect an unmarried partner, ensure your children inherit fairly, or simply control where your money goes, a clear will is essential.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete will (legally binding when properly executed and witnessed) plus three expert guides. Preview your will free before paying anything—no credit card required.

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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