Start date for calculation of interest on pecuniary legacy

Trusts Discussion
1

In a case where interest is due on a pecuniary legacy paid more than 12 months after the date of death, can anyone confirm whether the start date for calculation of interest should include or exclude the date of the 12 month anniversary?

For example, if the date of death was 30/09/2023, should we calculate the number of days including or excluding 30/09/2024? This is a small point but on a substantial legacy it could be worth arguing about.

S44 AEA 1925 states “Subject to the foregoing provisions of this Act, a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death.” I interpret this to mean that the executors have up to one year from the DOD to distribute, and could distribute, in my example, on 30/09/2024 without paying interest.

However, CPR Practice Direction 40A.15 provides that where a legacy is directed to be paid by any judgment of the Court, then in general, interest shall be allowed on the legacy at the basic rate payable for the time being on funds in court or at such other rate as the court shall direct, “beginning one year after the testator’s death”. This seems to imply that the calculation should be made including the date of the first anniversary.

It may be that there is an accepted rule which I am not aware of (I am not a litigator), in which case I should be glad if someone can point me in the right direction.

Diana Smart
Gordons LLP

2

I think both provisions are saying the same thing. Interest only becomes payable commencing with the first day after the expiry of the 12 month period that commenced on the relevant date. A reference to months must import a leap year if Feb 29 occurs during the particular period. In the 2 provisions mentioned I think that is implied; the alternative, that Feb 29 should always be ignored to reduce the period to a “standard” 365 days, seems wrong to me.

Jack Harper

3

I think this depends on the interpretation of “the expiration of one year from the death.” Does this period start on the day after the death or on the date of death? If the former, then the 1 year would expire on 30/9/24 as Diana suggests. If the latter, then the expiry date would be 29/9/24. After all, 2024 starts on 1/1/24 and ends on 31/12/24, not on 1/1/25.