Are the savings in ISAs or Premium Bonds going to complicate an estate when someone dies? Has uncertainty about nominations, probate and inheritance tax left estate planning unfinished? This piece focuses exclusively on how ISAs and National Savings & Investments (NS&I) Premium Bonds are treated in estate planning in England, what heirs should expect, and what practical actions executors, nominees and account-holders can take today.
Prepare to get clear, practical answers and step-by-step actions to reduce delays, preserve tax status where possible, and improve liquidity for beneficiaries. The sections that follow give direct, actionable items and references to official forms and regulators so that executors and those planning their estates can move with confidence.
Key takeaways: estate planning: passing ISAs vs premium bonds in 60 seconds
- ISAs normally form part of the estate for probate, but spouses and civil partners can often preserve ISA tax status using the surviving spouse allowance (APS) — act quickly after death to claim it.
- Premium Bonds remain attractively simple for heirs: NS&I pays out bonds on death (with short delays) and payouts are typically treated as part of the estate; winners before death still belong to the deceased but prizes won after death pass to heirs if held properly.
- Nominations matter: an ISA nomination speeds transfer but does not override the will; Premium Bonds can be held jointly or have clear nominee details via NS&I processes.
- IHT treatment differs in practice: both ISAs and Premium Bonds form part of taxable estate value, but the tax-efficiency of ISAs (tax-free income/interest) remains advantage after transfer only in specific, time-limited circumstances.
- Practical steps today: review nominations, list account details in a central estate file, and check provider procedures (including APS rules and NS&I claim forms) to reduce probate delay.
Including ISAs and premium bonds in estate planning: what to list and why
When compiling an estate inventory, list ISAs and Premium Bonds separately with account details, nomination status and beneficiary instructions.
- For each ISA, record: provider name, account number, ISA type (cash, stocks & shares, lifetime ISA), nomination status, date of last deposit and contact details for the provider.
- For Premium Bonds, record the NS&I holder name(s), NS&I number (or log-in), the estimated holding value and whether bonds are held jointly or under a trust or investment wrapper.
These items help executors decide whether the asset can be transferred without probate or whether it must pass via the estate. Keeping copies of recent statements and login instructions avoids unnecessary delays.
How ISAs and premium bonds are treated for inheritance: legal and tax basics
ISAs and Premium Bonds are both financial assets that normally pass under the deceased's estate.
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ISAs: An ISA does not automatically lose tax-free status on death. The account usually becomes 'deceased's account' and can be closed, transferred to the estate or, in some cases, preserved via Additional Permitted Subscriptions (APS) for a surviving spouse or civil partner. APS rules are time-limited and must be actioned with providers.
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Premium Bonds: NS&I accounts are held in the name of the bondholder; after death, NS&I can pay out the value of the bonds and any prizes won up to the date of payment. If prizes are drawn after death, treatment depends on timing and who holds the account (individual, joint or trust).
Both asset types normally count toward the value of the estate for inheritance tax (IHT) purposes. For official guidance on IHT, consult HM Revenue & Customs guidance on inheritance tax.
- ISAs: Providers generally freeze ISA access when notified of a death. The account no longer accepts new subscriptions. Executors should check the provider's process for closing the ISA or transferring value to beneficiaries.
- Premium Bonds: NS&I will suspend online access and provide an estate claims process. NS&I often pays out relatively quickly once evidence is supplied, especially for small estates.
Nomination, probate and passing ISA savings to beneficiaries: processes and timings
A nomination speeds up distribution but does not remove the need for probate if the amount forms part of the estate requiring probate.
Nomination versus will: what each does
- A nomination on an ISA is a request to the provider about who should receive the proceeds. It helps the provider act quickly but does not override a valid will or legal claims by intestacy rules.
- A will directs how the estate is distributed after probate. If an ISA nominee conflicts with a will, legal advice may be required to reconcile the two.
Probate: when is it required for ISAs?
Probate is required when the estate includes assets above the provider's threshold for release without probate. Thresholds vary. Providers give clear guidance on documentation required. Executors should get a grant of probate when the total estate (or individual accounts) exceeds thresholds or when institutions request it.
The additional permitted subscription (APS) for ISAs: how it works and timelines
- APS allows a surviving spouse or civil partner to subscribe to an ISA with an allowance equal to the value of the deceased's ISA at death, preserving the tax-free wrapper for the surviving partner.
- APS is time-limited: typically it must be used within a specific period after death and requires proof of relationship and proof of the deceased's ISA value at date of death.
- Providers vary in their paperwork. Executors should contact the ISA provider immediately and ask for the provider's APS form.
Helpful official sources and forms: see provider pages and HMRC notes on ISA treatment. For provider-specific APS procedures, contact the ISA provider directly or consult guidance at HMRC.
Premium Bonds payouts on death: what heirs should expect and the NS&I process
NS&I is often used because of simplicity and government backing, but the payout process still needs documentation.
What NS&I will ask for and typical timings
NS&I will normally request a copy of the death certificate, proof of executorship or probate, a claim form and ID for the claimant. NS&I sometimes releases funds faster for small amounts without full probate.
Typical timings (indicative at time of writing):
- For modest holdings, NS&I may release funds within a few weeks after receiving documents.
- For larger estates or where probate is required, the release may wait until the grant of probate is produced.
NS&I's official estate claims page provides the current forms and steps: NS&I guidance for bereaved families.
Winners drawn after death: who receives the prize?
- If a prize is drawn after death but before NS&I has paid out, it is usually treated as part of the estate and payable to the estate or an appointed beneficiary once the claim is processed.
- If bonds were held jointly, the joint holder may have an immediate right to the bond value, depending on how the joint holding was arranged.
Joint holdings and trusts: shortcuts and complications
- Joint accounts often pass automatically to the surviving joint holder and avoid probate for those funds.
- Bonds or ISAs held in trust require the trustee to follow trust terms and confirm how distributions should be made.
Comparing tax efficiency: ISAs versus premium bonds for inheritance tax (IHT)
Both ISAs and Premium Bonds form part of the deceased's estate for IHT valuation. The tax-efficiency of ISAs (income and gains exempt from income tax/CGT) applies while the funds remain within the ISA wrapper.
- For IHT, the important point is the asset value at death. ISAs do not receive special IHT relief; the tax advantage is later for the beneficiary when the asset remains within a qualifying ISA wrapper.
- APS can preserve ISA tax status for a surviving spouse, meaning that tax-free status continues in certain cases — this is a practical advantage but does not affect IHT due on the estate.
Example scenario (indicative):
- Deceased held a cash ISA valued at £200,000. That full value is included in the estate for IHT.
- A surviving spouse may be entitled to APS allowing an equivalent ISA allowance to be subscribed, preserving tax-free status for that amount when moved, but IHT is still calculated on the estate value at death.
For up-to-date IHT thresholds and rules, consult HMRC.
Practical steps to pass ISAs or bonds tax-efficiently: step-by-step for executors and account-holders
The following numbered steps form a practical checklist an executor or planner can use. These form the basis of an actionable how-to.
- Locate and list all ISA accounts and Premium Bond holdings, plus nominations and login details.
- Contact each provider immediately to notify them and request their bereavement procedure and forms.
- Apply for a grant of probate where requested; check whether providers will release funds without probate for small holdings.
- For ISAs with a spouse or civil partner, ask the provider about APS and submit required evidence promptly.
- For Premium Bonds, complete NS&I claim forms and supply the death certificate; check whether joint holding or trust terms affect entitlement.
- Keep clear records of communications, forms sent and dates; use recorded delivery for posted documents when requested.
These steps aim to protect tax status where possible and to ensure heirs receive funds promptly while complying with legal requirements.
How to pass ISAs and Premium Bonds: quick flow
🗂️ Step 1 → Find accounts & nominations
📞 Step 2 → Notify providers & request forms
📜 Step 3 → Apply for probate if required
🔁 Step 4 → Use APS for spouses where eligible
💷 Step 5 → Claim NS&I payouts with supporting docs
Quick comparison table: ISAs vs premium bonds in estate planning
| Feature |
ISA |
Premium Bonds (NS&I) |
| Probate |
Often required unless provider releases small amounts |
Often released quickly for small amounts; grant may be requested |
| Tax status after death |
Value included in estate; APS may preserve ISA wrapper for spouse |
Value included in estate; prizes after death treated as estate |
| Speed of access |
Can be slow if probate needed; provider dependent |
NS&I often pays promptly once documents provided |
| Ideal for |
Preserving tax-free income/growth for heirs in limited cases |
Simple cash transfer and government-backed security |
Balance strategic: what is gained and what to watch when planning estates with ISAs and premium bonds
When ISAs are the better strategic fit ✅
- When the goal is to preserve tax-free growth for a surviving spouse and APS is likely to apply.
- For sizeable savings where beneficiaries would benefit from continuing tax-free treatment and the surviving spouse can use APS within provider rules.
Flags and points to watch ⚠️
- Failure to file nominations or to notify providers promptly can delay transfers.
- Misunderstanding APS deadlines or provider-specific evidence requirements can result in losing the opportunity to preserve ISA status.
- Not checking whether accounts are held jointly or in trust can lead to incorrect assumptions about automatic transfer.
Datasets, evidence and sources
References to official guidance and regulator notes are essential for executors and advisers. For verifiable, up-to-date information consult:
Dudas rápidas sobre estate planning: passing ISAs vs premium bonds
How does nomination affect an ISA after death?
A nomination tells the provider the account-holder's preference but does not supersede the will; it helps the provider pay proceeds quickly to the named person where permitted. In practice, banks and ISA providers use nominations to streamline payment but may still require probate evidence.
Why might an ISA still require probate?
An ISA can require probate when the provider's release threshold is exceeded or when the provider asks for a grant to confirm the executor's legal authority. This is common with larger accounts.
What happens if Premium Bonds are in joint names and one holder dies?
If Premium Bonds are held jointly, the surviving joint holder usually becomes the sole owner and can claim payouts without probate, subject to NS&I verification.
How long does NS&I take to pay out after death?
NS&I timing varies; small sums may be paid within weeks once documents are provided; larger estates often await probate. Executors should contact NS&I early for specific timescales and forms.
Which is better for estate liquidity: ISA or Premium Bonds?
Premium Bonds frequently offer faster liquidity from NS&I once documents are supplied; ISAs can be slower if probate is needed. However, every provider's policy differs.
What if no nomination or will exists?
If there is no nomination and no will, intestacy rules apply and beneficiaries should follow the probate process; providers will pay the estate once legal authority is established.
Can a surviving spouse preserve ISA tax status automatically?
Not automatically. The spouse may be eligible for APS but must apply within provider and HMRC rules; contact the ISA provider promptly for their exact process.
Conclusion: final considerations and long-term value
Estate planning for ISAs and Premium Bonds requires precise, documented steps to avoid delays and preserve any available tax benefits. ISAs keep their tax advantages in limited transfer situations such as APS for spouses, but both ISAs and Premium Bonds count towards the estate for IHT. Practical preparation — nominations, up-to-date records, provider contact and understanding probate thresholds — materially reduces delay and uncertainty for beneficiaries.
Your practical plan of action
- Make a short list now of all ISA accounts and Premium Bond holdings with provider contact details and note nominations.
- Phone each provider to confirm the bereavement process and request required forms; download NS&I estate claim forms from their site.
- Store the death certificate and recent statements together in a labelled folder and inform the executor to avoid unnecessary postal delays.
Executors and those planning their estates should consider professional, regulated advice for complex IHT questions; this article is informational and does not constitute personalised financial advice.
