Legacies in a foreign currency

Trusts Discussion
1

I am drafting a Will where the testator is looking to make certain pecuniary legacies in euros. The testator is based in the UK, but the proposed legatees are mainly in Ireland, hence the suggestion to express the legacies in euros.

Whilst the testator does have some assets in european bank accounts, it is entirelely possible that when it comes to administering their estate, the assets will be encashed and transferred to a UK bank account, meaning the funds will need to be converted back to euros when paid to the legatees.

Do you have any suggestions on how to deal with the exchange rate when drafting the gift clause? I have seen some precedents that suggest the rate of exchange should be ‘as per X bank’ or, ‘at the rate of exchange at which that foreign currency can be bought in London’, but these seem problematic and a little unclear. Are we best suggesting that ultimately it is down to the trustees’ discretion as to what exhange rate to use on the day? The intention was for the relevant date to be the date on which the payments are actually made.

2

Have you considered demonstrative legacies – directing that the legacies be paid out on the European bank accounts?

Not sure if this might create extra taxation issues in the country in which the accounts are held, though.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Yes, that would work very well – particularly if specified in the Will. So put in the Will something along the lines of… €1,000 (using the rates of exchange prevailing on the date payment is actually made) to my nephew Timmy.

Julian Cohen

Simons Rodkin