We have been dealing with an intervention matter which has included obtaining compensation from the SRA. We did not administer the estate or arrange the distributions.
The deceased died in September 2005 and there was a lengthy delay settling the widow’s £125,000 Statutory Legacy. An interim payment of £19,000 was made in May 2006, the ‘final’ payment of £106,000 was made in January 2014. One reason for the delay was looking into development potential for land/property the deceased owned. The problem which has arisen is the interest on this Stat Legacy, which, for the period in question, was 6% from the date of death.
We arrived at a 5 figure sum of outstanding interest calculated on a simple interest basis at 6%, taking into account the two payment dates. Initially the interest was calculated as accruing to the final payment date, which we initially believed would be an additional ‘one off’ payment due to the widow. However, we now understand that the above payments should possibly have been apportioned between interest and capital e.g. £19,000 would have been approx. £14,000 capital and £5,000 interest etc. As such, there is, in effect, still a sizeable capital sum due with interest still accruing.
My questions are:
a) Are we correct in respect of the capital/income apportionment?
b) if so, can anyone point me in the right direction for some definitive reading/reference material as we have been unable to locate anything despite trying numerous sources
c) is there a limitation for the widow to claim the interest? Probably a long-shot, but worth asking. You will probably not be too surprised to hear the widow and the step-son do not get on so an agreement is unlikely.
We are considering instructing a Barrister (probably will), but I’d very much appreciate any insight members may have.
Final point on this cautionary tale; it seems to me if there are to be any delays settling the Stat Legacy, full explanation of the interest must be given to all parties in the estate. Admittedly the interest rates in place now are far less severe, but still should be considered.
Parker Rhodes Hickmotts