Why inherited wealth is not always as accessible as clients expect.

One of the things we see surprisingly often at Provira is an estate that looks incredibly wealthy on paper, but has very little cash available when somebody actually needs it.

There might be a £750,000 house, investments and other assets sitting in the estate; the beneficiaries know they’re due to inherit a large amount of money, but that doesn’t necessarily mean they can access any of it yet. That’s the bit I think can come as a surprise.

We tend to talk about inheritance in terms of how much somebody is going to receive. What we don’t talk about nearly enough is when they’re actually going to receive it, what needs to happen first and whether the money will be there when they need it.

For advisers, I think that’s an important distinction. After all, £500,000 in an estate and £500,000 sitting in your client’s bank account are two very different things.

A valuable estate can still have a cash problem

A lot of the cases we see aren’t estates that don’t have enough money, quite the opposite. 

They have plenty of value, it’s just tied up in the wrong place at the wrong time. Property is the obvious example.

Someone could leave behind a house worth £800,000 but relatively little in savings. Eventually, that property may be sold and there could be more than enough money to distribute to the beneficiaries.

But “eventually” is the important word.

Probate has to progress, the property needs to go on the market, a buyer needs to be found and the sale needs to complete. In a slower housing market, that can take time.

Meanwhile, there may be beneficiaries who are making financial plans based on the inheritance they know is coming. That’s why I’d encourage advisers to look beyond the headline value of an estate. Where does that value actually sit, and how easily can it be turned into cash?

Probate doesn’t work to your client’s financial timetable

Most advisers don’t need me to tell them that probate can take time.

What I think is easier to overlook is what that delay actually means for the person waiting for the money.

If your client has no immediate plans for their inheritance, another few months may make very little difference. But maybe they’re planning to use it to clear their mortgage, maybe they want to buy a property, retire, invest the money or help their children financially. Suddenly, timing matters.

A client can be in the slightly strange position of knowing they’re going to receive hundreds of thousands of pounds while still having to make financial decisions today without access to any of it.

If I were advising that client, that’s what I’d want to understand. What are they waiting to do with the inheritance? And what happens if the money takes another six or twelve months to arrive?

Inheritance Tax can create the same problem for executors

There’s another side to inheritance liquidity that comes up regularly in our conversations with advisers, and that’s how the estate itself pays its bills.

Inheritance Tax is the obvious example. An estate is always worth a lot more than it needs to pay in Inheritance Tax, but that doesn’t necessarily mean the executor has the cash available to pay it.

If most of the wealth is sitting in property or other illiquid assets, you can end up with a funding problem even though the estate looks more than capable of paying the bill on paper.

That’s why one of the first questions I’d encourage advisers to ask is: where is the cash actually going to come from?

If the answer is selling an asset that can’t easily be sold yet, you’ve potentially found a liquidity gap. And I’d much rather advisers spot that problem early than the executor discover it when the money is already needed.

Don’t just ask what the estate is worth

IHT isn’t the only thing that can put pressure on the cash available within an estate.

There can be legal and professional fees, property costs, mortgages, insurance, maintenance and other liabilities to deal with while the estate is being administered.

This is especially relevant where property is involved. A house doesn’t stop costing money because its owner has died. It may still need to be insured, maintained and have its mortgage paid while the estate is being dealt with.

Those costs can continue for months. Again, none of this necessarily means there’s a problem. A liquid estate may be perfectly capable of paying those expenses.

For advisers, I think the useful question is not just, what is this estate worth?

It’s also, what needs to be paid before that value becomes accessible?

Spot the problem before it becomes urgent

By the time somebody calls us with an urgent liquidity problem, it’s normally fairly obvious what has happened.

There’s a tax bill that needs paying, a property sale is taking longer than expected, a beneficiary needs money that is still tied up in the estate. What I’d like to do is help advisers spot these situations earlier.

That doesn’t mean assuming every client involved in probate needs finance, far from it. Sometimes waiting is absolutely the right thing to do.

But if you know a client is expecting a big inheritance, I’d want to understand what they plan to do with it and whether their plans depend on receiving it within a particular timeframe. And if you’re dealing with an executor, I’d want to understand what liabilities are coming up and where the money to pay them is actually going to come from.

Those conversations can tell you very quickly whether liquidity is likely to become an issue.

Where inheritance and estate advances can fit

This is where I think advisers should at least be aware of the funding options that exist.

An Inheritance Advance can allow a beneficiary to access part of their inheritance before the estate has finished being administered.

An Estate Advance looks at the problem from the executor’s side, providing access to estate funds that can be used to pay estate costs like IHT, property maintenance and other liabilities.

Neither should automatically be the answer just because probate is taking longer than someone would like. The question is whether earlier access solves a genuine financial problem.

If a beneficiary is paying interest on debt they plan to clear with their inheritance, then it’s worth a conversation. Likewise, if an executor has an IHT bill but most of the estate’s wealth is tied up in property, then it’s probably worth looking at.

If everybody is perfectly comfortable waiting, there may be nothing to solve.

Advisers don’t need to become inheritance finance specialists to make that distinction. You just need to recognise when there’s plenty of wealth on paper, but not enough cash available at the point somebody needs it.

If you have a client in that position, speak to us. We’re always happy to act as a sounding board and explain whether an Estate Advance or Inheritance Advance could potentially help.

The Great Inheritance Illusion

This is exactly what we’ll be discussing in our upcoming webinar next month, The Great Inheritance Illusion: Why Clients Need to Talk About Inheritance Liquidity Now.

We’ll be bringing together voices from across the legal, financial and probate sectors to talk about why inherited property wealth isn’t always as accessible as people expect, the pressures that can arise during probate and how advisers and solicitors can spot potential liquidity problems sooner.

We’ll also be looking at when estate and inheritance advances may be appropriate and, just as importantly, when they’re not.

However, if you’re already dealing with a client that is struggling with estate liquidity, you don’t need to wait for the webinar. Book a call with the Provira team and talk us through the case.

About Provira

Provira is the UK’s most established provider of inheritance and estate advances, trusted by hundreds of financial advisers and brokers. We’ve supported thousands of families, advancing £20,000 to over £1 million to help cover IHT, legal fees and personal needs – quickly, securely, and without personal guarantees or property charges.

We work closely with introducers and can provide everything from referral copy to co-branded materials. All you need to do is make the introduction – we’ll take it from there.