Are you protecting your clients from poor exchange rates?
It is now increasingly common for estates to contain foreign assets or for there to be beneficiaries of estates who reside abroad. For practitioners dealing with the administration of estates, giving proper consideration to how the funds are transferred overseas or repatriated into their clients’ home jurisdiction can result in sizable savings.
Some law firms may only deal with a handful of probate cases with beneficiaries based in foreign jurisdictions each year, so the issue of exchange rates can often be easily overlooked, however, the rates at which currencies are converted can have a considerable impact on the overall amount of the estate that is preserved. Practitioners can typically save their clients or beneficiaries up to 3% of the amount transferred by using a currency specialist to convert currency, rather than a high street bank.
Exchange rates are one of the ways that high street banks make large profits and there have been UK instances of client complaints due to unfavorable exchange rates used to convert currency, particularly involving conveyancing and probate cases. While there is no SRA protocol on the process for making international currency transfers, practitioners may wish to exercise SRA principle 4 to act in the best interest of each client, by using a currency specialist to convert and transfer funds rather than a high street bank.
The beneficiary of a UK estate residing in France is due to inherit £300,000 and their wish is for the funds to be paid into their French personal bank account, which holds Euros. There are two options available to the practitioner handling the administration of the estate: instruct their bank to transfer £300,000 directly to the beneficiary’s French account, or introduce a currency specialist into the transfer process.
|Amount in GBP||Exchange rate||Amount in Euros received|
|High Street bank||£300,000||1.10||€330,000|
By using Currency Index to convert the sterling amount into Euros, the beneficiary receives some €9,000 more than if the high street bank had converted the currency.
Implementing a process for international currency transfers need not add complexity to current systems and can be set up with relative ease. Either the beneficiary or the solicitors firm needs to register with Currency Index online, and submit the necessary compliance documents. The most appropriate option will depend upon the circumstances surrounding the specific requirement.
In both cases, the practitioner will need to instruct the law firm’s bank to transfer funds to Currency Index’s client account. The funds will then be converted and transferred to the beneficiary’s account with the requested payment reference.
To find out how we can help you to protect your clients funds from poor exchange rates, please complete the enquiry form or contact one of our expert consultants – 0800 043 2623/01923 725 725.