THE growing number of UK estates containing international assets or with beneficiaries based overseas are squandering thousands, and potentially tens of thousands of pounds, when the assets are ultimately distributed, a currency expert has warned.
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, also says will writers, probate firms, solicitors, financial advisers and any other professionals involved in estate planning and management that do not pay close enough attention to the issue of currency conversion are failing the estate’s beneficiaries.
Redondo says it is becoming increasingly common for a UK estate to feature overseas assets, whether that’s a holiday home in Spain or a share portfolio in the USA — or to involve beneficiaries who reside abroad.
But he says that, while the nature of estates has evolved in today’s global economy, the way money is converted remains stuck in the past.
Redondo says: “When it comes to the final mile, namely receiving funds from the disposal of an overseas property or distributing inheritances to foreign beneficiaries, most probate firms, in my experience, default to their standard corporate bank.
“The problem with this is that, when funds land, they are converted immediately at whatever the prevailing market rate happens to be that morning, regardless of whether the currency market is experiencing a temporary dip — and this is costing beneficiaries dearly.”
“One of the ways traditional banks cover their high overheads is by charging steep exchange rate margins, and these can immediately eat into the value of an estate when it is converted into different currencies, whether that’s the Pound, Dollar or Euro. They will transact on the spot without a thought as to the timing of the conversion.”
Redondo says that, by defaulting to corporate banks, many probate firms are failing to protect the wealth they were trusted to manage — and urges anyone who is due to benefit from an overseas asset in an estate to ask the probate firm how the money is being converted.
Redondo says: “With an estate where a currency transaction is required, it’s vital that the funds are converted at the optimum time, and that they are shielded from volatile market swings. So be sure to ask what steps are being taken to protect your inheritance.”
Redondo adds that the growing number of overseas transactions in estates means probate firms and any other professional involved in the estate planning or management process, including the will writer, financial adviser and solicitor, should also be proactively addressing the issue.
He added: “Where overseas assets or beneficiaries feature in the equation, all parties involved should be alive to the fact that the way funds are converted will reflect directly on the service they deliver.
“Defaulting to a high-overhead retail bank means accepting that a portion of the estate’s value will be lost to unnecessary fees and poor exchange rates.
“That is not in the interest of the estate and its beneficiaries and is something that needs to be looked at as a matter of urgency by all parties involved.”
