Inheritance and Your IVA, Question by Question
How an inheritance is treated, and when it can complete your IVA.
What happens if I inherit money during an IVA?
It is treated as a windfall. Under the standard terms, an inheritance worth more than £500 is an after-acquired asset that you must declare to your supervisor, and it is normally paid into your IVA for the benefit of your creditors. You cannot simply keep it, even if it lands straight in your bank account. How much is taken depends on the size of the inheritance and what you still owe.
Do I have to declare it?
Yes, as soon as you know about it. You must tell your supervisor, and you should do so promptly, in many IVAs within 14 days of receiving it. In fact, you should declare an inheritance as soon as you become aware one is coming, even before the money arrives. Failing to declare a windfall is a serious breach of your IVA that can cause it to fail, so honesty here is essential.
Do I have to pay all of it in?
Usually, yes, if it is over £500. As a rule the full inheritance is paid into the IVA, not just part of it, up to the point your debts and the costs are covered. Your supervisor is not obliged to let you keep any of it, though they have discretion to allow you to retain some for a genuine need. Anything under the £500 threshold can normally be kept.
Does it have to be cash?
No, other assets count too. An inheritance is not only money. If you inherit property, a vehicle, jewellery or any other valuable item, its value can be caught by the windfall clause in the same way. You may need to realise the value, for example by selling an inherited item, so that it can be contributed. Your supervisor will help work out what is due based on the value involved.
Could an inheritance end my IVA early?
Yes, if it is large enough. If the inheritance is big enough to repay your debts in full plus the IVA's costs and fees, your arrangement can be brought to an early, successful conclusion. Under the current rules, where the funds cover everything owed, no statutory interest is added, your supervisor concludes the IVA and issues a completion certificate, and any money left over is returned to you.
Will I end up paying back more than I owe?
No more than your original debt plus costs. A windfall never means paying back more than 100p in the pound of what you originally owed, together with the IVA's fees, and, on some older arrangements, statutory interest. Once that ceiling is reached, the rest is yours. So even a large inheritance cannot leave you worse off than having repaid your debts in full.
Can I keep any of the inheritance?
Sometimes, at your supervisor's discretion. While the default is that the inheritance goes to your creditors, supervisors can allow you to retain some, for example for essential home repairs or replacing necessary household items. A small portion may also be agreed through a variation if there is a genuine reason. But you must ask first; you cannot decide for yourself to hold money back.
What if I know an inheritance is coming?
Tell your supervisor straight away. If you learn you are due to inherit, perhaps a relative has died and the estate is being settled, you should declare this even though the money has not arrived. Your supervisor may extend the IVA to capture it, or ask for a lump sum once the estate pays out. Trying to delay or hide an expected inheritance can put your whole arrangement at risk.
Should I get advice?
Yes, especially for a large or complex inheritance. How an inheritance is treated, and whether any of it can be kept, depends on your circumstances and your IVA's terms. A free, impartial adviser can explain what to expect and your options before you act. Importantly, never spend or give away an inheritance before speaking to your supervisor, as that can breach your IVA. It costs nothing to check first.
