What to do when you inherit money from your parents
Published 28 July 2026
First of all, I am sorry you are reading this.
If you have found this page, you are probably in the middle of one of the hardest periods of your life. And somewhere alongside the grief, the practical weight of everything that needs to be sorted is beginning to make itself known.
Losing a parent changes everything, and somewhere in among the grief there is often a practical question that catches people off guard. What do I actually do with what I have inherited?
If this is you, you are not alone. I am seeing more women in their fifties and sixties coming to me in exactly this position. A parent has passed away, and along with the loss there is now a sum of money, a share of a house, or a pension that needs a decision. It can feel uncomfortable to think about finances at a time like this, but a few thoughtful early steps can save a lot of stress later on.
There is no need to rush
The first thing I tell every client in this situation is that there is rarely any urgency to act immediately. Once probate has been granted and the money or assets are in your name, you can take your time. Inheritance does not come with a deadline attached, and decisions made in the first few weeks after a loss are not always the ones you would make with a clearer head a few months later.
A good first step is simply to let the money sit in an easily accessible account while you think. This is not a delay tactic, it is good financial sense. You are allowed to grieve before you plan.
Understand what you have actually inherited
Inheritance rarely arrives as a single tidy sum. It might include a portion of a house, an ISA, a pension, shares, or a mix of all of these. Each type of asset behaves differently and is treated differently for tax purposes, so it is worth understanding exactly what has come to you before deciding what to do with it.
If a pension is involved, what happens next depends partly on the type of pension your parent held and partly on your own circumstances. Some pensions can be passed on relatively tax efficiently, particularly if your parent died before age seventy five, though this is not guaranteed and depends on the scheme rules and how the funds are drawn. It is worth getting this checked properly rather than assuming, since pension rules around inherited funds are genuinely one of the more complex areas of estate planning. Tax rules also change over time and depend on a person’s individual circumstances.
Inheritance tax on a parent's estate
A common misconception is that the person inheriting pays inheritance tax directly. In most cases, any inheritance tax due is paid before assets are distributed to those set to inherit, so what you receive has usually already had this accounted for. That said, the rules around the nil rate band, the residence nil rate band, and how these interact when a family home is involved can be genuinely confusing, and many families are paying more tax than they need to simply because the estate was not structured with this in mind while a parent was still alive.
Tax treatment depends on individual circumstances and may change over time. The value of any tax benefits or reliefs will therefore vary from person to person and cannot be guaranteed.
If you are now thinking about your own estate as a result of receiving this inheritance, that is a natural and sensible response. Many people find that inheriting from a parent is the moment they start thinking seriously about their own legacy and what they want to pass on in turn.
If you have inherited a house
Inheriting a property, particularly the family home, carries an emotional weight that a pension or savings account does not. Beyond the financial decision of whether to sell, rent, or move in, there is often a sentimental pull that makes the decision harder than it looks on paper.
From a financial planning perspective, the questions worth asking are practical ones. Do you need the capital tied up in the property released, or can it remain invested in bricks and mortar for now. Would renting it out create an income that suits your circumstances, bearing in mind the tax implications of rental income. Selling a property you have inherited can also trigger capital gains tax considerations if its value has changed since you inherited it, so this is worth checking before any sale completes.
Thinking about what to do with inherited money
Once you understand what you have and any tax has been settled, the question becomes what to do with it. For many of my clients, this money represents something different to other savings. It often comes with a desire to do something meaningful with it, whether that is paying down a mortgage, supporting children or grandchildren, or building security for their own retirement.
Many people choose to invest money they will not need to access for a number of years and are comfortable leaving it invested through the ordinary ups and downs that come with it. Investments have historically delivered higher returns than cash held in savings accounts over the long term, though this is not guaranteed and you could get back less than you put in. Thinking about how long you can leave the money invested for, and how comfortable you would feel watching its value move up and down along the way, is the best starting point for deciding whether investing suits you.
For money you might need sooner, or simply want to keep accessible, cash savings offer more day to day stability. The trade off is that inflation can reduce the real value of cash held over time, so what feels like a safe choice today may buy less in years to come. Many people end up using a combination of both, balancing the stability of cash with the longer term growth potential of investing, recognising that neither comes with a guaranteed outcome.
Why this is worth getting right
I have worked with several clients who inherited money from a parent and made a quick decision they later regretted, often because they felt they ought to do something with it straight away. There is no obligation to decide everything at once. Taking financial advice at this stage means you can look at the full picture, your tax position, your own retirement plans, and what matters most to you, before committing to a course of action.
If you have recently inherited money, property, or a pension from a parent and are not sure where to start, I would be glad to talk it through with you. Sometimes the most valuable thing is simply having someone look at the full picture with you and help you feel confident in whatever you decide.
SJP approved 06/07/2026
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