Good afternoon
Can someone confirm that we are not going mad? Where there is an intestacy with spouse and children, interest is payable on the fixed net sum. The AEA25 says the interest is payable at the Bank of England rate that had effect at the end of the day on which the intestate died. Does this mean that rate, and it stays at that rate even if the base rate subsequently changes after the date of death, or does it mean that you follow the base rate so if it changes, the interest on the fixed sum also changes. The language would imply the former, but are we missing anything that confirms the latter?
thanks in advance.
I asked the same question in July and no one replied!
My reading of Schedule 1A of section 46 of AEA 1925 (as amended) is that the rate applicable to the statutory legacy is fixed as the Bank of England rate on the date of death and does not change, Other colleagues believe it varies with changes in that rate. Given the fluctuations in interest rates over recent years this can make a substantial difference to the calculation.
Who is right?
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My reading of s.46(1A) AEA 1925 is that the rate of interest is fixed at the end of the day of death (and does not vary with the BoE base rate).
If the rate of interest was intended to vary from day to day with the BoE base rate, wording similar to that of Paragraph 15, Practice Direction 40A, CPR Part 40, which governs interest on cash legacies, could easily have been adopted instead.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
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Many thanks for your reply, Paul.