Deed of Variation and interest earned

I was granted Letters of Administration for my late brother's Estate as he died without leaving a Will. The beneficiary now wishes to use a Deed of Variation to redistribute his assets. The Solicitor suggested that interest should be added to the amount, but the money wasn't kept in a separate account and I am finding it hard to separate the interest from that source from their other regular income and outgoings from the same account. The money came in on different dates from different banks, and was paid into different accounts. Some was used to pay for the funeral. All in all I'm not sure I could accurately work out the interest, or can I just use the headline rate for the account times the total net Estate?

Comments

  • user1977
    user1977 Posts: 13,272
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    That sounds fair enough. How accurate is anybody expecting it to be?
  • SiliconChip
    SiliconChip Posts: 1,262
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    What account was the money kept in, was it one of yours that you also continued to use for your own purposes? If so that's not a great idea for the reason that you've now come across, among others. When I was executor I used an account of my own but made no transactions at all that were not directly connected to the estate until it had all been distributed to the beneficiaries. As an aside, I used a current account so that a range of payments could be made, which meant that there was no interest to be accounted for.
  • Jowwie
    Jowwie Posts: 72
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    I am interested to see what advice the experts have here as I am going to be in a similar situation due to the delays with probate office and latterly with works and pensions. Both of which appear unable to process in a timely manner.
    I have found this article which suggests you pay nothing for the first twelve months from date of death. From twelve months you pay interest based on a rate set by the court funds office. 
    The current rate stated here is more than we are able to obtain from our bank, and is subject to tax, so the residual beneficiaries could end up disadvantaged if we do this.

  • JGB1955
    JGB1955 Posts: 3,432
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    I'm wondering why the solicitor thinks interest should be added?  I wasn't aware that it was even possible to put 'estate in administration' funds into an interest bearing account.
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  • What account was the money kept in, was it one of yours that you also continued to use for your own purposes? If so that's not a great idea for the reason that you've now come across, among others. When I was executor I used an account of my own but made no transactions at all that were not directly connected to the estate until it had all been distributed to the beneficiaries. As an aside, I used a current account so that a range of payments could be made, which meant that there was no interest to be accounted for.
    Hi, the money went directly from the banks to the beneficiary's accounts, some (smaller amounts) before probate and some after. The complications arise because the money wasn't ring fenced within the accounts and some 18 months have passed.
  • JGB1955 said:
    I'm wondering why the solicitor thinks interest should be added?  I wasn't aware that it was even possible to put 'estate in administration' funds into an interest bearing account.

    As per my reply to SiliconChip, the money was paid straight to the beneficiary so most of it arrived after probate was granted. I assumed the solicitor knew what he was talking about but may need to quiz him further.
  • poppystar
    poppystar Posts: 1,251
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    I don’t see that there is a ‘should’ here. It’s up to the person making the Deed of Variation to decide how much he wants to redistribute. It might be all, it might be just some of it, it might be all but not including interest. Why would the solicitor even be interested in the amount? If this is the solicitor solely doing the DoV then he should just be doing what is asked. Even if it was the solicitor you had paid to administer the estate the same applies - although in that case you might question if the estate should be paying for the solicitor to set up the DoV. 
  • user1977
    user1977 Posts: 13,272
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    It's reasonable advice that the (new) beneficiaries are entitled to interest on the estate funds while they've been administered - and the OP does just say "suggested". Up to the parties concerned whether they are bothered.
  • SiliconChip
    SiliconChip Posts: 1,262
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    What account was the money kept in, was it one of yours that you also continued to use for your own purposes? If so that's not a great idea for the reason that you've now come across, among others. When I was executor I used an account of my own but made no transactions at all that were not directly connected to the estate until it had all been distributed to the beneficiaries. As an aside, I used a current account so that a range of payments could be made, which meant that there was no interest to be accounted for.
    Hi, the money went directly from the banks to the beneficiary's accounts, some (smaller amounts) before probate and some after. The complications arise because the money wasn't ring fenced within the accounts and some 18 months have passed.

    Thanks for your response, but I'm now even more unclear what the situation is. Perhaps if you can answer a few questions it may become clearer.
    1. Is there only one beneficiary?
    2. Are you the beneficiary?
    3. When you refer to interest, do you mean interest that was earned on the pricipal amounts before distribution of the estate (in which case the interest simply forms part of the estate) or is the solicitor suggesting that because of the delays notional interest should be added to the amount distributed?
    4. In the latter case, where does the solicitor suggest that the additional funds to pay the interest should come from?
    I don't really understand what the beneficiary's desire to do a DoV has to do with it, surely the only question is how much money should be paid to the beneficiary - it will then be up to the beneficiary to decide whether all or some of that amount is redistribited under a DoV.
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