The role of executor carries several legal and financial responsibilities, one of which is the duty to pay statutory interest on pecuniary legacies if they are not paid within a specified timeframe.
Charities are reliant on legacy income as a vital source of funding. It is important for executors, charities, and any professional advisers to be aware of how statutory interest works and understand the implications of delay when administering an estate.
Understanding pecuniary legacies and statutory interest
A pecuniary legacy is a gift of a fixed sum of money left to a beneficiary (an individual or a charity) in a will.
Unlike specific or residuary gifts, pecuniary legacies are gifts of cash. This type of gift should ideally be paid within one year of the date of death of the person who had made the will. This is known as the “executor’s year.”
The legal position is that executors cannot be compelled to distribute the assets of the estate until at least one year has elapsed from the date of death. This is intended to give the executors sufficient time to gather information regarding the estate’s assets and liabilities, pay any inheritance tax, obtain a grant of probate (if needed) and search for beneficiaries of the estate.
If payment of pecuniary legacies is not made within the one-year timeframe, statutory interest becomes payable.
- Rate of interest: Currently set at 2.81% per annum (as of 9 January 2026). The rate has fluctuated considerable in recent years so, if a significant time has lapsed since the executor’s year ended, it would be necessary to check the historical rates and work out the interest payable for the various periods.
- Commencement: Interest will start to accrue from the first anniversary of the date of death.
- Relevant law: Governed by section 32 of the Administration of Estates Act 1925 and supplemented by equitable principles and case law.
Why delays occur in administration of estates
There are many reasons why it may not be possible for an executor to pay the pecuniary legacy within the executor’s year:
- The nature of the estate assets may make them more difficult to administer (for example foreign property or private company shares).
- Uncertainty around tax liabilities, including inheritance tax and capital gains tax.
- Disputes between beneficiaries or claims against the estate, for example under the Inheritance (Provision for Family and Dependants) Act 1975.
- Administrative inefficiencies or lack of experience on the part of lay executors who do not have legal representation.
While some delays may be reasonable, they would not necessarily exempt the estate from its obligation to pay interest.
Implications for charity beneficiaries
Charitable beneficiaries are often gifted pecuniary legacies in wills, and they may suffer financial detriment if legacy payments are delayed.
If payments are late, the charity may need to consider the following:
- If payments are made later than anticipated, this would impact the charity’s ability to plan and allocate resources.
- Charities have a duty to manage their finances responsibly, which would include monitoring and, if necessary, pursuing legacy income and statutory interest.
- Charity trustees may be under a duty to seek payment of interest if a legacy is paid late.
Executor’s duties and best practice
To mitigate the risk of statutory interest and ensure efficient administration, the estate executors should consider the following:
- Timely action: Ensure that the assets and liabilities are identified at an early stage so that any tax can be paid and the grant of probate obtained efficiently.
- Early engagement: Liaise with professional advisers early, especially in complex estates.
- Accurate records: Maintain clear documentation of actions taken and reasons for any delays.
- Communication: Keep beneficiaries informed, especially charities who may be relying on prompt payment of legacy income.
Failure to pay statutory interest can lead to:
- Breach of duty: Executors may be held personally liable for losses resulting from delay.
- Litigation or complaints: Beneficiaries, including charities, may bring claims to recover any unpaid interest or they may accuse the executors of maladministration.
- Reputational damage: A professional executor who does not pay statutory interest risks criticism and damage to their professional credibility, particularly in cases involving charities.
Practical tips for charitable beneficiaries
When a charity is notified that they are entitled to a pecuniary legacy they may wish to consider:
- Checking when the executor’s year will end in relation to expected gifts: Use legacy monitoring systems and maintain communication with executors.
- Request timelines: Politely request anticipated payment dates. If the legacy is going to be delayed, request details of why.
- Document correspondence: Maintain records of all communications in case of any dispute.
- Seek advice: Consider seeking legal advice if statutory interest may be due and has not been paid correctly if at all. Using discretion: If the amount of interest is modest, it may not be cost effective to pursue this from the executor. Charitable beneficiaries may not wish to cause upset if the personal representative is not a professional executor but a grieving family member or friend if the charity were to press the executor for interest. Discretion may need to be used depending on the amounts involved.
Statutory interest on pecuniary legacies can be an important yet often overlooked aspect of estate administration. Executors should be aware of their duty to distribute legacies promptly or face the obligation to pay interest.
For charitable beneficiaries, being proactive in monitoring legacy income and pursuing late payments is crucial to fulfilling their fiduciary responsibilities and securing much-needed funding.
By adopting best practices and promoting timely communication, both executors and charities can navigate the complexities of statutory interest and ensure the estate is administered fairly and efficiently.
