Managing an inheritance can be challenging because you often receive the wealth during an emotionally turbulent time when you are grieving the loss of a loved one.
Yet, if you make sensible decisions with inherited wealth, the funds could make it easier to achieve your goals in life. This is what your loved one likely hoped for when they left part of their estate to you.
In many cases, you might inherit a cash lump sum, but you could also receive stocks and shares.
Inheriting investments could complicate things as there are potentially more factors to consider when deciding how to manage the stocks and shares. Consequently, you might need some professional guidance.
Read on to learn five crucial tips to follow if you inherit stocks and shares.
1. Don’t make any rushed decisions
The most important tip when receiving an inheritance of any kind is to avoid making rushed decisions.
When emotions are running high, you may not want to deal with complicated financial issues. This could mean that you make quick decisions you later come to regret.
You might decide it would be easiest to sell the investments right away and take the cash, for example. Yet, if markets have fallen recently, you could make significant losses by selling immediately.
Additionally, holding the investments and letting them grow, or potentially generating an income from them, could be more suitable for your long-term financial plan.
That’s why it’s important to avoid making any decisions right away, especially during an emotionally challenging time, and think carefully about the best course of action.
2. Understand exactly what you’ve inherited
Before you can decide how to manage the investments, you need to understand precisely what you’ve inherited.
If a loved one passes their entire portfolio to you, it could contain a combination of various investment types including individual shares, funds, and bonds.
Understanding the make-up of the portfolio is key before choosing what to do with it. You may also need to consider the separate investments and how they have performed in the past.
Most importantly, you’ll need to decide whether the investments align with your own attitude to risk and financial goals.
In some cases, you may inherit a portfolio that supports your existing financial plan. However, you might find that the investments are far riskier than you are comfortable with or perhaps don’t offer the level of growth you require to reach your financial goals.
Understanding all the investments, the level of risk they carry, and their past performance allows you to make reasoned decisions about how to manage the portfolio.
3. Review where the investments are held
The type of account that the investments are held in may influence the tax treatment of the wealth, and how easily you can access it.
For example, the investments might be held in a Stocks and Shares ISA. This could be beneficial as there is no Dividend Tax or Capital Gains Tax (CGT) to pay on wealth in an ISA.
However, the rules about transferring a Stocks and Shares ISA vary depending on whether you inherit from a spouse or civil partner, or somebody else.
In 2025/26, you can contribute up to £20,000 across all your ISAs. If you inherit a Stocks and Shares ISA from a spouse or civil partner, you receive an “Additional Permitted Subscription” (APS) equal to the value of their ISA.
Essentially, this allows you to transfer the investments to your own Stocks and Shares ISA and retain the tax benefits.
Yet, if the person you inherit from is not a spouse or civil partner, the rules are different. While you can take ownership of the investments, you won’t benefit from an APS.
If you don’t have enough of your own ISA allowance left to place the investments in your Stocks and Shares ISA, you may have to deposit them in a General Investment Account (GIA) instead.
This could mean you lose the tax benefits of an ISA and may have to pay Dividend Tax and CGT on any returns or profits you generate in the future.
You may face the same tax challenges if the investments are already in a GIA when you inherit them.
That’s why you may want to review how you hold inherited investments and consider whether you could move them into a more tax-efficient account.
4. Consider the tax implications of selling the investments
While you may benefit from holding inherited investments, you may also decide that selling them is the best course of action as you could use the cash to support other areas of your financial plan.
You might also need to sell and re-purchase investments if you plan to move them from a GIA to a Stocks and Shares ISA.
It’s important to consider the tax implications of selling investments because, if they’re held outside an ISA, you may have to pay CGT.
Additionally, if you sell inherited shares at a loss within 12 months of the person’s death, you may be able to reclaim a portion of the Inheritance Tax (IHT) due on the estate. This is known as “IHT share loss relief”.
These tax rules can be incredibly complex, and it’s important to understand how selling investments will affect your tax position before you make any transactions.
5. Seek professional advice
As you can see, there are many different factors to consider when inheriting stocks and shares.
Professional advice can be incredibly valuable in this situation as we will help you understand what you’ve inherited. We also have the expert knowledge to navigate some of the complex tax implications of holding and selling the investments.
Further to this, we can review your financial plan with you and determine how you could use your inheritance to support your wider goals.
Get in touch
If you have inherited some stocks and shares, we can offer guidance about how best to manage them.
Please contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2025 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.