When a UK estate has beneficiaries living overseas, the executor must convert sterling into one or more foreign currencies to pay each legacy — and the exchange rate decides what actually lands in the beneficiary’s account. Fixing the rate with a forward contract once the sums are confirmed protects legacy values from currency movement between probate and distribution.
Administering an estate is demanding enough without a moving exchange rate quietly changing the figures. Yet the moment a will names a beneficiary abroad, or leaves a gift in euros, dollars or Australian dollars, currency becomes part of the executor’s job. This guide explains where the exchange rate bites, what an executor’s duties mean in practice, and how to pay overseas beneficiaries with certainty rather than guesswork.
Who bears the currency cost when an estate has overseas beneficiaries?
A UK estate is almost always held and valued in sterling. When a beneficiary lives abroad and is to receive their share in a local currency, someone has to convert pounds into that currency — and the rate on the day, plus the margin built into it, determines the outcome. Who feels that cost depends on how the gift is written.
If the will leaves a fixed sterling sum — say £300,000 — and the beneficiary in France wants it in euros, the GBP/EUR exchange rate on conversion day sets how many euros they receive. If instead the will leaves a foreign-currency legacy — “€500,000 to my niece” — the estate must find enough sterling to buy those euros, and an adverse move increases the sterling cost, reducing what is left in the residue for everyone else. The direction of the risk changes, but the risk is always there.
Estates rarely involve a single currency, either. One estate might owe a legacy in euros to a beneficiary in Spain, a share of residue to a child who has moved to Australia, and a further gift to a relative in the United States. Each leg is a separate conversion, at a separate rate, on a separate day — and each can be managed, or left to chance.
Does an executor have a duty to manage the exchange rate?
An executor is a fiduciary, and the currency decision is part of that responsibility rather than a purely administrative afterthought. Under section 1 of the Trustee Act 2000, a trustee must exercise “such care and skill as is reasonable in the circumstances”. Section 35 of the same Act applies that statutory duty of care to personal representatives — the executors and administrators of an estate — when they exercise powers such as investing or handling estate assets.
In plain terms, an executor is expected to act reasonably with the estate’s money. Converting a large foreign-currency legacy at a poor rate, or leaving a distribution exposed to weeks of market movement without considering the options, is the kind of decision a residuary beneficiary could later question. Taking sensible steps to fix or protect the rate is a defensible way to show the estate was handled with care.
This is guidance on the currency mechanics, not a substitute for the estate’s solicitor or a tax adviser. But the principle is straightforward: the exchange rate is one more variable an executor is expected to handle prudently, and there are established tools for doing so.
When can an executor distribute, and how does timing affect the currency?
Distribution normally follows the grant of probate, once debts, tax and expenses are settled. Executors also have breathing room on timing: under section 44 of the Administration of Estates Act 1925, a personal representative is not bound to distribute the estate before the end of one year from the death — the so-called “executor’s year”.
That window matters for currency. The gap between valuing the estate and actually paying an overseas beneficiary can run to many months, and exchange rates can move materially over that time. GBP/EUR, for example, is driven largely by the interest-rate differential between the Bank of England and the European Central Bank, which shifts as the outlook changes. You can follow the current picture on our currency forecasts page and check live levels with the currency converter, but neither tells you where the rate will be on the day you distribute.
The point of the executor’s year is not to wait and hope. It is that once the figures are known, an executor can lock the rate for a future distribution date rather than being forced to convert at whatever the market offers on the day the money is ready.
What are the options for paying beneficiaries in another currency?
Executors have the same currency tools available to any large-transfer client, and the right one depends on whether the sums and dates are confirmed. The table below sets out the main approaches and their honest trade-offs.
| Approach | How it works | Best suited to | Trade-off |
|---|---|---|---|
| Spot conversion | Convert and pay at today’s rate | Sums confirmed and ready to pay now | No protection against later moves; you take the rate on the day |
| Forward contract | Fix today’s rate for settlement on a future date, up to 12 months ahead | A legacy amount is known but distribution is weeks or months away | Commits the estate to that rate; a deposit is usually required |
| Market order / rate alert | Target a chosen rate; the deal triggers automatically if it is reached | Some flexibility on timing and a specific rate in mind | The target may not be hit; not a guarantee of execution |
| Regular payment plan | Convert and send a series of scheduled payments | Instalment legacies or structured settlements paid over time | Each payment still reflects the rate unless combined with a forward |
For most estates the decisive choice is between converting on the spot and using a forward contract to fix the rate ahead of the distribution date. Where an executor wants to target a particular level rather than lock in immediately, market orders can automate that. If the estate is being wound up in stages, a scheduled plan keeps the payments orderly. Deciding between fixing now and waiting is itself a judgement call, and our guide on whether to lock in a rate or wait walks through the trade-offs.
How the exchange rate changes what a beneficiary receives: a worked example
Take an estate with a foreign-currency legacy of €500,000 to a beneficiary in Spain. The figures below use an illustrative rate of 1.17 against a weaker 1.11 to show the effect — they are examples, not current rates.
- At an illustrative 1.17, buying €500,000 costs the estate about £427,350.
- At 1.11, the same €500,000 costs about £450,450.
- The difference — roughly £23,100 — comes out of the residue, reducing what every other beneficiary receives.
Framed the other way, a 2% move against the estate on a €500,000 legacy is €10,000, or roughly £8,500 of extra cost. On a sterling legacy paid out in euros the risk simply flips: a fixed £300,000 gift buys about €351,000 at 1.17 but only about €333,000 at 1.11, so it is the overseas beneficiary who receives €18,000 less. Either way, the exchange rate is quietly rewriting the will’s intended figures — and a forward contract fixed once the amount is confirmed removes that uncertainty for the specific sum and date.
What checks apply when sending estate funds abroad?
Large distributions to overseas accounts sit squarely within anti-money-laundering rules. Under regulation 28 of the Money Laundering Regulations 2017, the firm handling the payment must carry out customer due diligence and, where relevant, establish the source of funds. For an estate, that typically means being ready to evidence the grant of probate, the identity of the executor, and where the estate money came from.
Having this in order before you distribute keeps the payments moving rather than stuck in checks. Our guide to the documents and process for sending over £10,000 abroad covers what is usually requested. Handling that compliance so funds are not held up is a large part of what a specialist does; client money is safeguarded by FCA-authorised partners Currencycloud and ScioPay throughout.
Do overseas beneficiaries pay UK tax on their inheritance?
Inheritance Tax in the UK is a charge on the estate, not on the individual beneficiary. As GOV.UK sets out, any IHT due is paid from the estate by the person dealing with it — the executor — before the residue is distributed. Beneficiaries, whether in the UK or abroad, do not normally pay a separate UK tax on a legacy they receive.
What happens once the money arrives in the beneficiary’s own country is a matter for that country’s rules, and a beneficiary should check their local position with a qualified tax adviser. Cross-border estates can also raise UK residence and domicile questions that a solicitor should handle; our overview of UK Inheritance Tax and expats is a useful starting point. This guidance covers the currency, not personal tax planning.
Common mistakes executors make with foreign-currency legacies
- Leaving conversion to the last moment. Converting a large legacy at whatever the market offers on distribution day exposes the estate to weeks of avoidable movement.
- Assuming the beneficiary’s bank will give a fair rate. Sending pounds and letting the receiving bank convert can strip value through the margin and any correspondent-bank deductions before the money lands.
- Overlooking the residue. With a foreign-currency legacy, an adverse move increases the sterling cost and quietly reduces what residuary beneficiaries receive — a fairness point executors are expected to consider.
- Not confirming the sum before fixing. A forward is most useful once the legacy amount and rough date are settled; fixing a guessed figure creates its own mismatch.
- Preparing the compliance paperwork too late. Source-of-funds and identity checks are routine, but gathering them after you try to pay is what causes delays.
Why executors use a specialist currency broker
Paying beneficiaries abroad is not the same task as receiving an inheritance from overseas — if you are on the receiving end instead, see our guides to receiving an inheritance from abroad and to receiving a large payment into the UK. It is also distinct from making lifetime gifts of money abroad or sending regular support to family overseas. Distributing an estate has its own shape: multiple beneficiaries, several currencies, fiduciary duties, and a compliance trail.
A specialist broker helps an executor fix rates for known legacy amounts, run several currency legs from one estate, and clear the source-of-funds checks so payments are not held up. Whether that route works out better value than a high-street bank depends on the estate, and our guide on whether currency brokers are cheaper than banks sets out the mechanics. Every transaction at Cambridge Currencies is completed by phone with a dedicated specialist, so an executor is not left interpreting an app screen while responsible for other people’s money.
Frequently asked questions
Can an executor fix an exchange rate before distributing an estate?
Yes. Once a legacy amount and an approximate distribution date are known, a forward contract can fix the rate for settlement up to 12 months ahead, so the beneficiary receives the intended amount regardless of how the market moves in the meantime. A minimum transfer size applies.
Who pays the currency conversion cost on a legacy to an overseas beneficiary?
It depends on how the gift is written. A fixed sterling legacy converted for the beneficiary means the beneficiary’s received amount moves with the rate. A foreign-currency legacy means the estate’s sterling cost moves, which affects the residue shared among the other beneficiaries.
Does an executor have to distribute within a year of the death?
No. Under section 44 of the Administration of Estates Act 1925, a personal representative is not bound to distribute before the end of one year from the death — the “executor’s year”. That window can be used to plan the currency rather than convert under time pressure.
What documents are needed to send estate funds abroad?
Expect to evidence the grant of probate, the executor’s identity, and the source of the estate funds, in line with the Money Laundering Regulations 2017. Having these ready before you distribute keeps the payments moving through the required checks.
Do beneficiaries living abroad pay UK tax on money they inherit?
UK Inheritance Tax is paid by the estate before distribution, not by the individual beneficiary. Overseas beneficiaries do not normally pay a separate UK tax on the legacy itself, but the tax treatment when the money arrives is governed by their own country’s rules, which they should check locally.
Can one estate pay beneficiaries in several different currencies?
Yes. A single estate can pay legacies in euros, US dollars, Australian dollars and more, each as a separate conversion. A specialist can handle the different currency legs and, where amounts are confirmed, fix each rate individually.
Is a forward contract suitable if the legacy amount is not yet confirmed?
A forward works best once the amount and rough date are settled, because it commits the estate to converting a set sum. Where the figure is still uncertain, a market order to target a chosen rate, or simply monitoring the market, may fit better until the numbers are firm.
Speak to a specialist about an estate distribution
If you are an executor with beneficiaries abroad, a short conversation can map the currencies involved, the timing, and how to fix rates for known legacies. Request a currency quote for an estate distribution and speak to a dedicated Cambridge Currencies specialist by phone about protecting each beneficiary’s share.
