How long does probate take in the UK?

Probate typically takes between 6 and 12 months for straightforward estates in England and Wales in 2026. More complex estates, or those with disputes, can take considerably longer. The reader should not feel rushed to make financial decisions before the estate is settled. The 90-day rule on the new blog page covers the period from when the reader is notified, not from when probate completes.

Do I have to pay inheritance tax immediately?

Inheritance tax is generally paid from the estate itself before any assets are distributed. The executor or administrator is responsible for arranging payment. In some cases, you can pay inheritance tax in instalments over 10 years if the estate includes property. The 2026/27 IHT threshold is £325,000 (nil-rate band), with an extra £175,000 residence nil-rate band when the main residence is left to direct descendants. The standard rate above the threshold is 40 percent.

Can I keep inherited cash in my current account?

You can, but the current account is the wrong home for inherited cash. Cash savings rates as of late July 2026 sit around 4.9 to 5.0 percent on top easy-access accounts, well above the current account rate of effectively zero after inflation. The accessible savings account should be a top easy-access (around 5 percent), with anything meant to work beyond five years moved into an ISA or pension wrapper.

What happens to debts when someone dies?

Debts are paid from the deceased person's estate before any inheritance is distributed to beneficiaries. If the estate cannot cover all debts, they are typically written off. You are not personally responsible for the deceased's debts unless you shared joint liability, for example a joint mortgage or a joint loan.

Should I pay off my mortgage with inherited money?

This depends on your mortgage rate and your overall financial situation. If your mortgage rate is high (over around 6 to 8 percent), clearing it is a guaranteed return. If your rate is low (under 4 percent), the inheritance often does better inside a pension or ISA wrapper where returns compound tax-free. The decision rule is the same 8 percent threshold used elsewhere on Delphina.

What is the 7-year rule for inheritance tax gifts?

Gifts made within 7 years of death may be subject to inheritance tax on a tapering scale. Gifts made 7 or more years before death are completely exempt. The annual exemption is £3,000 per donor per tax year, which can be carried forward one year if unused. The 7-year rule matters most for the donor's estate, not for the beneficiary who has already received the gift.

Inherited Money: A Practical Guide to What to Do First

The call from the solicitor. The reading of the will. The bank transfer that lands. The three-folder rule, the three-bucket split, and the one thing to do before 25 August.

Syd Lawrence

18 August 2026

The first week is not for the money

It is the call from the solicitor, or the phone call from a sibling. Someone you love has died, and the will has been read, and a number has been put on your share. The reader is somewhere between 38 and 55, has a mortgage and a workplace pension, and has not been through this before. The instinct is to do something with the money. The instinct is reasonable and almost always premature.

The first week after a death is for the people, not the money. The probate process takes 6 to 12 months for a straightforward estate in England and Wales in 2026, longer for complex ones. The reader does not need to make any financial decision in that first week. They need to make three folders.

The three-folder rule

Folder one is the paperwork: the will, the death certificate, the grant of probate, the solicitor's letters. Folder two is the accounts: every account, pension, investment, and property the deceased held, with the reference numbers and the current balances. Folder three is the people: the executor, the co-beneficiaries, the solicitor. The three folders fit on one shelf. The rest of the plan is built on top of them.

How much inheritance are we talking about?

The reader wants to know whether what they have received is normal. The honest answer: most UK inheritances are below the inheritance tax threshold and most readers receive a sum that changes their financial picture without changing their life. The 2024/25 figures from HMRC show around £7 billion of inheritance tax raised across roughly 27,000 estates, which is about 4 percent of all deaths. The other 96 percent of estates pass through without paying inheritance tax at all.

Inheritance tax nil-rate band

£325,000

Frozen since 2009. Source: HMRC, GOV.UK.

Residence nil-rate band

£175,000

When main home is left to direct descendants. Source: HMRC.

Standard IHT rate above threshold

40%

Reduced to 36% if 10% or more is left to charity. Source: HMRC.

For a married couple leaving the family home to direct descendants, the combined threshold is up to £1,000,000 before any inheritance tax is due. Most reader estates fall under this combined figure. The tax planning conversation matters more for estates above £1 million than it does for the average reader.

For the reader who has just received an inheritance, the question is not whether inheritance tax was due. The question is what to do with the money once it lands. That answer is the three-bucket split.

The three-bucket split (day 91 onwards)

Once probate has settled and the money has actually landed in the reader's account, the lump 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, currently paying around 4.9 to 5.0 percent in late July 2026. 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 (over 8 percent APR) is paid off in full 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.

Bucket 3: the rest

Whatever is left after Buckets 1 and 2. This is the chunk that is up for pension top-up, ISA investment, mortgage overpayment, or holding in cash while the reader decides. The decision about this chunk can wait. The Bucket 3 split is laid out in detail on the new what to do with an inheritance page.

The annual gift most readers lose

£3,000 per year, per donor

Every UK taxpayer can gift up to £3,000 per tax year completely free of inheritance tax, and the unused allowance can be carried forward one year (so £6,000 in one year if the previous year's allowance was unused). Most readers never use this allowance. The lost exemption compounds for the donor's estate, not for the recipient.

The maths, on £3,000 a year for 7 years:

£3,000 × 7 = £21,000 removed from the donor's estate. At 40 percent IHT, that is £8,400 of inheritance tax saved for the donor's beneficiaries, if the donor dies within 7 years of the start of the gifts. Source: HMRC.

Small gifts and wedding gifts

On top of the £3,000 annual exemption, readers can give up to £250 per person per year to any number of individuals, with no IHT implication. Wedding gifts are also exempt: £5,000 to a child, £2,500 to a grandchild, £1,000 to anyone else. None of these count against the £3,000 annual exemption.

Where Bucket 3 should live

The chunk that survives Buckets 1 and 2 is the chunk that gets to work. Two wrappers matter most: the pension and the ISA.

Pension contributions

Contributions to a pension 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 any Bucket 3 money the reader does not expect to need before age 55 (57 from 2028). Source: HMRC.

ISA contributions

The 2026/27 ISA allowance is £20,000. 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. Source: GOV.UK.

How to invest the rest of Bucket 3

What to do before 25 August

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. If the inheritance has already landed and probate is settled, the three-bucket split is the next move: runway in an easy-access savings account, debts over 8 percent APR cleared in full, and the rest parked for the Bucket 3 decision.

For the tactical counterpart to this guide, see the new what to do with an inheritance in the first 90 days page. The full monthly action sits in the closing section of that page.