The importance of liquidity in estate planning

• Liquidity in estate planning is important as it means the estate will have accessible cash to cover urgent bills such as Inheritance Tax.
• A lot of UK estates are asset-rich but cash-poor, and IHT must be paid before probate can be granted, creating a significant financial obstacle.
• Provira’s Estate Advance provides a simple financial solution, giving access to up to 50% of the net value of the estate within days.

When planning an estate, liquidity is an important factor as, when someone dies, an estate will likely need to pay off costs such as Inheritance Tax (IHT) and other administrative expenses. 

This means cash needs to be instantly available as there are often strict deadlines to meet. The most pressing one is HMRC’s six-month deadline for paying off Inheritance Tax. 

But when an estate is lacking the cash to cover these costs in time, and probate keeps assets frozen until it’s granted, estates can find themselves stuck.

At Provira, we support families struggling to access the funds needed to cover urgent costs, such as Inheritance Tax, all the time.

Our Estate Advance exists for exactly this situation. It gives executors access to up to 50% of the net value of the estate within days, relieving financial strain and allowing them to keep probate moving and focus on more important things. 

Not only that, we keep costs low. We only charge simple interest, not compound interest, don’t charge early repayment fees and don’t require monthly instalments. We are simply repaid in full once funds have been released from the estate.

To speak to the team about securing an Estate Advance click here.

What does liquidity mean in an estate?

Liquidity is how much of an estate’s value sits in cash rather than tied up in property, business or shares.

Planning an estate is important as executors are less likely to face financial challenges during the probate process.

This is particularly important for illiquid estates.

Liquid estates are those that have cash instantly available. These are usually held in bank accounts, ISAs or pensions. 

Estates that are more illiquid tend to be made up of property, land, unlisted shares or business interests. These all contribute to the value of the estate for Inheritance Tax purposes.

When illiquid estates are faced with an Inheritance Tax bill (which must be paid in order for probate to be granted) executors regularly find themselves struggling to cover it in time. This is because the cash needed to pay Inheritance Tax is tied up in assets.

While you may think you would be able to sell high-value assets to free up some cash, the reality is that the probate process requires all assets to remain frozen until it’s complete, leaving many estates stuck.

Let’s look at an example for an estate valued at £750,000:

• The primary residence is valued at £700,000: illiquid
• They have £50,000 in the bank: liquid

The estate is passed down to two children, qualifying for both the nil-rate band (£325,000) and the residence nil-rate band (£175,000). This means the estate has a £500,000 tax-free allowance

See more on who qualifies for tax-free thresholds in our guide here.

Based on this, £250,000 of the estate is in the taxable range, leaving the executors with an Inheritance Tax (IHT) bill of £100,000. This is based on the standard rate of Inheritance Tax currently sitting at 40%.

As the estate only has £50,000 in cash, this means the executors need to find an additional £50,000 in order to pay off the IHT bill.

And when the executors can’t sell the property until probate is granted, and probate can’t be granted until the IHT is paid, it can feel like a catch 22.

This example highlights the real importance of liquidity in estate planning and, while there are a few different options for estates to pay off their IHT bill, it’s where Provira’s Estate Advance can offer a lifeline.

Read more about it here.

What happens if the estate can’t pay Inheritance Tax on time?

If an estate can’t pay Inheritance Tax before the six month deadline, it will immediately start accruing interest and probate will be delayed until it’s resolved. 

The interest rate HMRC currently charges sits at 7.75%.

It also means beneficiaries will face a delay in receiving their inheritance. 

You can organise with HMRC to pay off Inheritance Tax in 10 equal instalments, agreeing to a daily interest amount on the outstanding amount. 

This is designed for illiquid estates, so the agreement is tied to a specific asset. As soon as the asset is sold, the remaining amount of Inheritance Tax due must be paid immediately. 

This can provide estates with an immediate sense of relief, but the first instalment is still due within six months and executors must find cash they often don’t have. 

Provira’s Estate Advance takes this strain away. With our loan we give you the time to figure out your next step by providing immediate access to up to 50% of the net value of the estate. 

There’s no personal liability as the loan is entirely secured against the estate, and you won’t face any credit checks or hidden fees. 

To start your application, reach out to our team today.

Why can liquidity be a bigger problem for business and farming estates?

Liquidity can be a bigger problem for business and farming estates because they usually have more of their value tied up in assets. 

Previously, assets that fell under agricultural or business property could qualify for 100% relief from Inheritance Tax. This meant their value wouldn’t be included in the total value of an estate for IHT purposes, and therefore wouldn’t push up the bill.

In April 2026, HMRC introduced reforms that significantly reduced this. 

Now, only the first £2.5 million of combined agricultural and business property gets 100% relief. Anything above this value receives 50% relief and is effectively taxed at a rate of 20%.

We break down all the changes to BPR and APR in detail in our guide here.

These changes, coupled with the fact that HMRC has frozen the nil-rate band until 2030, mean many estates will face a higher IHT bill than previously expected, creating a liquidity problem where none existed before. 

This highlights just how important liquidity is in estate planning.

How Provira can help if you have an illiquid estate

An estate needs to have some level of liquidity to be able to cover urgent estate expenses that come up during the probate process. 

As probate temporarily freezes assets until it’s granted, having the cash immediately available keeps the process moving along.

At Provira, we understand administering an illiquid estate can be a heavy burden for executors to bear, especially amidst grief.

Our Estate Advance provides executors with access to up to 50% of the net value of an estate within days, helping cover estate costs. 

We’re unique in only charging simple interest rather than compound interest, don’t charge for early repayment and don’t require monthly payments, keeping costs low and transparent.

Plus, one of our compassionate underwriters is dedicated to your case so you have the support you need from start to finish.

If you are an executor struggling with an illiquid estate, apply for an Estate Advance with Provira today.