Payment of Legacies in Euros


#1

We are dealing with an estate, the deceased was domiciled in England and Wales and all assets were held in England. Before she died she became ill and went to stay with her son in Ireland. She prepared a will in Ireland which left several legacies and it has been drafted so that the legacies are stated in Euros. The estate is being administered in England as all assets are held in England. The legacies now need to be paid and the monies are held in GBP. What date should the exchange rate be calculated- the date of death, the date of payment, the 1st anniversary of death, or an alternative date?

Eleanor Holland
The Wilkes Parftnership


(andrew.goodman) #2

As peculiar as it may be, I would have thought that the dod rate has to be used for IHT purposes and the rate on the payment date for the actual payment. Given the legatee has a right to the Euro sum, if they will accept GBP then I think it must have to be the GBP equivalent of the Euro sum on the day of payment.

This is off the top of my head but I would struggle to justify any alternative.

Andrew Goodman
Osborne Clarke LLP


(Nigel Scase) #3

I would follow the same route as Andrew. ER at dod for IHT & ER at date of payment to calculate the sterling equivalent

Nigel Scase
Greene & Greene


(Paul Saunders) #4

The situation would seem much the same as if the deceased had made a
gift of, say, 100 shares in X plc, requiring the executors to buy such
shares to satisfy the gift.

In those circumstances the beneficiary would be entitled to the cash
value of the shares so, in the present instance, the legatees may elect
to receive the sterling equivalent.

Whilst I agree with Andrew’s thoughts, as the nature of such gifts has
been litigated in the past there may be case law setting out how the
legatee’s cash equivalent is to be calculated.

Having said the above, as the will was made in Ireland it may be that
Irish Law will apply and not English Law. However, as the cases that
would inform the position are likely to have been decided in the 19th
century, the outcome might be the same whichever law applies.

Paul Saunders


(malcfinney1) #5

For UK IHT the date of death would seem the relevant date.

Subject to the terms of the will and assuming English law would not the conversion simply be carried out at the date of appropriation? However, if for example there was a significant, say, continual appreciation in sterling between the date of death and the date of appropriation is there not an argument that a beneficiary could demand the exchange rate at the end of the executor’s year be used?

Malcolm Finney