Joe Goodwin explains how considering the impact of exchange rates and the foreign exchange sector can benefit practitioners and their beneficiaries.
Globalisation has meant that it is now increasingly likely that beneficiaries of estates reside overseas or that estates often contain overseas assets or shares - the deceased may have owned a holiday home in France for example that will need to be sold and the proceeds repatriated to the UK.
Taking French property as an example, once the French property is sold the practitioner dealing with the administration of the estate will arrange for the Euros to be repatriated back to the firm’s UK client account to be distributed accordingly.
One element in this process that is often overlooked when the euros are transferred from the French solicitors account and converted into GBP, is the exchange rate at which banks convert the currency. It’s not always obvious that banks make large profits on foreign exchange but the key consideration for practitioners is the large margin between the buy and sell rate.
There is a way to avoid these large fees - if a currency specialist is used to convert the Euros to GBP instead of the banks, beneficiaries can gain up to 4% more of the amount transferred. This doesn’t sound like much, but on a transaction of €300K, the beneficiary gains up to €12K extra.
The same logic applies for larger amounts and for currency transfers going out of the UK as well as coming in to the UK.
Case Study - November 2018
The beneficiary of an estate resides in England and is due to inherit a large sum of €1.66M following the sale of a Spanish property.
By using Currency Index to convert the currency instead of the bank high street bank, the beneficiary is over £36K better off, (which is enough to cover administration fees)!
The process is straightforward; the Spanish Lawyer transfers the euros to Currency Index’s euro account, Currency Index convert the funds as above and transfer to the UK solicitor’s GBP client account. Same-day transfer and no transfer fees.
Security of funds
To ensure that client funds are safe and secure, Currency Index operate with segregated client accounts, are regulated by the FCA as an authorised payment institute and regulated by HMRC.
Currency Index specialise in working with Law firms to ensure that international currency transfers are made in the best interest of the client. Transfer processes are simple and straightforward and can be implemented without adding complexity to current systems.
Joe Goodwin is Business Development Manager at Currency Index.
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