Inheritance During an IVA: What You Need to Disclose

Are you wondering about IVA and inheritance? You’re in the right place to find out more. Each month, over 170,000 people visit our website seeking advice on dealing with debt.

An inheritance can affect an IVA before it starts, while it is running or during completion. The terms of your own arrangement and when you become entitled to the inheritance matter.

In this handy guide, we’ll help you understand:

•  How getting an inheritance might change things.
•  If you can keep some of your inheritance.
•  What the rules say about hiding inheritance money.
•  How to know if an IVA is the best choice for you.

Our team is made up of people who have dealt with debt problems too. We know what it feels like, and we’re here to help you make the best choices.

How Does It Affect You Receiving an Inheritance?

An Individual Voluntary Arrangement is a formal agreement to deal with debts. You must disclose your financial position accurately so the insolvency practitioner can assess whether it is suitable and prepare a proposal.

If you become entitled to an inheritance during your IVA, tell your supervisor promptly. It may be an asset that must be paid into the arrangement. Do not assume that waiting for probate or receiving the money after your last monthly payment puts it outside the IVA.

Inheritance can include money, property or other assets. Your supervisor will check the terms and explain what must be contributed, taking account of any excluded assets and the amount needed to meet the arrangement’s obligations.

Do You Have to Pay the Inheritance Money to your Creditors?

Follow your supervisor’s instructions and the agreed terms. An inheritance usually represents an additional contribution; it does not automatically replace your remaining monthly payments or finish the IVA early.

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The 2025 protocol standard terms cover after-acquired assets worth more than £500, unless excluded. Older or bespoke IVAs may have different terms. Disclose the inheritance and ask your supervisor before spending or transferring it.

What Happens If You Inherit the Money Before an IVA?

An inheritance received before you propose an IVA is part of your financial position and must be disclosed. You cannot assume that assets already received are protected merely because there was no IVA at that time. They may affect whether an IVA is needed, what you can offer creditors and whether assets can be excluded with creditor agreement.

Should You Delay an IVA when You are Getting the Inheritance? 

Delaying an IVA does not automatically let you keep an inheritance outside it. Tell your adviser about an expected or received inheritance before deciding what to do. It may make another way of dealing with the debts more suitable.

Get advice before giving assets away or paying selected creditors in preference to others. Those decisions can affect a later insolvency proposal or bankruptcy.

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Is it Illegal to Hide Inheritance Money from IVA?

You must not conceal an inheritance or give false information. Nondisclosure can breach the IVA, lead to recovery action or termination, and deliberate dishonesty may have legal consequences.

There are some consequences of hiding the received legacy from your IVA, such as:-

Legal Procedure 

Your supervisor can require information and take steps under the agreement to recover an asset that should have been contributed. The outcome depends on the terms and facts, rather than every omission automatically leading to a lawsuit.

Termination of Your IVA Agreement

A material omission or failure to pay an amount due can put the arrangement in breach. Contact your supervisor immediately about a mistake or difficulty. Depending on the terms, there may be a process to explain or remedy a breach before termination.

Bankruptcy

If an IVA fails, creditors may resume recovery of the outstanding debts, and bankruptcy can be one possible outcome. It is not an automatic result in every case.

Get advice promptly if your IVA is at risk. The 2025 protocol standard terms explain the rules for arrangements using that protocol; your own proposal, modifications and applicable terms must also be checked.

References

1. The Gazette – UK individual insolvency statistics: Q3 2023