What to Do With an Inheritance in the First 90 Days
The three-folder rule. The 90-day rule. The three-bucket split on day 91.
The call has come. The number is on the paper. Do not act on it for 90 days.
The first 90 days after an inheritance are the only days that decide the next ten years. The money is real but it is not yet yours in the practical sense. Probate takes 6 to 12 months for a straightforward UK estate, longer for complex ones. The 90-day rule is the rule because the worst financial decisions of a reader's life are made in the first week after a bereavement.
You have just lost someone you love, and the solicitor has read the will, and a number has been put on your share. The instinct is to do something with the money. Pay off the mortgage. Move it into a savings account. Invest the lot. The instinct is understandable. The instinct is almost always premature. The next 90 days are for stopping the bleeding, not for picking a new home for the money. The page is the case for waiting.
This page is the tactical counterpart to the inherited money guide. The guide gives the framework. This page gives the 90-day rule, the three-bucket split on day 91, and the one thing to do before 25 August. Read them in either order. The first 90 days, the inheritance sits in a separate savings account and you do not touch it.
What just happened to your money
An inheritance in the UK is made up of three parts, and they arrive at three different times. Knowing which is which is the difference between thinking you have £70,000 and actually having £70,000.
- The probate estate. The deceased's assets, minus their debts, minus inheritance tax (if any), minus the executor's costs, divided by the number of beneficiaries under the will. This is what you actually inherit. Probate takes 6 to 12 months for straightforward estates, longer for complex ones or where there is a dispute. Source: GOV.UK.
- The inheritance tax treatment. The 2026/27 inheritance tax threshold is £325,000 (the nil-rate band), with an extra £175,000 residence nil-rate band when the main residence is left to direct descendants. Anything above the combined threshold is taxed at 40 percent, or 36 percent if 10 percent or more of the estate is left to charity. Most reader inheritances fall below the combined threshold and no inheritance tax is due on them. Source: HMRC.
- The annual exemption. Independently of the estate, every UK taxpayer can gift up to £3,000 per tax year with no inheritance tax implication, with a one-year carry-forward if unused. The annual exemption matters for the donor's estate, not for the reader who has just inherited. Source: HMRC.
The 90-day rule
Why 90 days? Because the reader's decision-making in the first week after a bereavement is the worst it will be in their life. The first 90 days is for three things only: stopping the bleeding (the paperwork, the accounts, the people), getting the estate into a settled state, and giving yourself enough time to make the rest of the decisions without panic. Day 91 is the first day on which any decision about the inheritance is the right kind of decision.
The three-folder rule (day 1 to day 14)
Before the inheritance is even settled, the reader needs three folders on one shelf. The three folders fit on a single kitchen shelf and take one afternoon to set up.
Folder 1: the paperwork
The will. The death certificate. The grant of probate. The solicitor's letters. The HMRC forms. Everything paper that has crossed the reader's path since the day of the death.
Folder 2: the accounts
Every account, pension, investment, and property the deceased held, with the reference numbers and the current balances. Include joint accounts and the deceased's workplace pension.
Folder 3: the people
The executor. The co-beneficiaries. The solicitor. The accountant. The financial adviser (if any). Names, phone numbers, email addresses. One page each.
The three folders are the inputs to the rest of the plan. Without them, every later decision is guesswork. With them, every later decision has a foundation.
The three-bucket split (day 91 onwards)
Once probate has settled and the money has actually landed in the reader's account, the inheritance is split into three buckets, in this order. The order is the order.
Bucket 1: runway
Three to six months of essential spending held in a top easy-access savings account. As of late July 2026, the top easy-access accounts pay around 4.9 to 5.0 percent. The point is not the interest. The point is the time the reader buys themselves to make the rest of the decisions without panic. Source: Moneyfacts.
Bucket 2: debts over 8% APR
Any high-interest debt the reader themselves holds (over 8 percent APR) is paid off in full on day 91 before anything else. Credit cards, store cards, personal loans, overdrafts. The reason is arithmetic, not moral: no investment reliably returns more than 8 percent a year after charges, and most readers in this situation are not picking individual shares.
The pension rule for Bucket 3
If Bucket 3 is more than around £5,000, the right home for at least some of it is the pension wrapper. Pension contributions get tax relief at the reader's marginal rate. For a higher-rate taxpayer, that is 40 percent tax relief on what goes in, instantly. The pension wrapper is the right home for Bucket 3 money the reader does not expect to need before age 55 (57 from 2028). Reference the pay rise pension page for the wider pension rule.
The ISA alternative for Bucket 3
If the reader is at the lifetime allowance limit on their pension, or if they expect to need the Bucket 3 money before age 55, the 2026/27 ISA allowance of £20,000 is the alternative. Money inside an ISA wrapper grows tax-free and can be withdrawn without further tax. The ISA is the right home for Bucket 3 money the reader expects to need before age 55. Reference the cash ISA versus stocks and shares ISA page for the wrapper choice.
The annual exemption most readers never use
Independently of the inheritance, the reader can use their own £3,000 annual exemption to gift money to their own children or other family members each tax year, completely outside the inheritance tax calculation for the reader's own estate. Most readers never use this allowance. The lost exemption compounds for the reader's estate, not for the recipient.
The maths, on £3,000 a year for 7 years:
£3,000 × 7 = £21,000 removed from the reader's own estate. At 40 percent inheritance tax, that is £8,400 of inheritance tax saved for the reader's own beneficiaries, if the reader dies within 7 years of the start of the gifts. Source: HMRC.
What to do this month
One action, one shelf, one hour
Before 25 August 2026, get the three folders onto one shelf. Folder one is the paperwork. Folder two is the accounts. Folder three is the people. The rest of the plan follows from those three folders. The 90-day rule starts the day the inheritance is notified, not the day probate completes. If the inheritance has already landed and probate is settled, the three-bucket split on day 91 is the next move.
- The three folders go on a single kitchen shelf, not in a filing cabinet. The shelf is the one place in the house the reader cannot avoid.
- Folder 2 (the accounts) is the only one that needs to be perfectly complete by 25 August. Folders 1 and 3 can be filled in as the paperwork and the calls come in.
- On day 91, sit down with the three folders, the inheritance statement, and the inherited money guide. The three-bucket split on day 91 is the rest of the plan.
For the wider framework on managing an inheritance, see the inherited money guide. For the pension-line rule for Bucket 3, see the pay rise pension page. For the ISA wrapper choice for Bucket 3, see cash ISA versus stocks and shares ISA. For the wider picture of whether the rest of the financial position is on track, see am I on track financially.
Related reading
- Inherited money guide - the wider framework on managing an inheritance, with the annual exemption detail and the pension / ISA wrapper choice.
- Pay rise pension: what to do - the pension-line rule for Bucket 3, with the tax-relief maths.
- Cash ISA versus stocks and shares ISA - the wrapper choice for Bucket 3 money the reader expects to need before age 55.
- Am I on track financially? - the wider picture for the reader who has received an inheritance and wants to know what the rest of their position looks like.