It has been reported that increasing numbers of families are using Deeds of Variation to pass inheritance to younger generations who have been hit hard by the pandemic.
A Deed of Variation (DOV) allows for a portion of an estate or a fixed sum to be passed, for example, directly to the grandchildren of the deceased rather than the children who were the original beneficiaries. One or all of the beneficiaries of an estate can use a DOV to redirect the funds they were due to receive.
DOVs have become an increasingly attractive option for families whose younger generations have suffered financial losses or difficulties as a result of the pandemic. Research shows that young people have been among the worst hit by events of the past 12 months or so; being more likely to have been placed on furlough or to have lost their jobs completely, as well as having less savings to fall back on in times of financial difficulty.
Alongside this, with the rising cost of property, young people are turning to older family members for assistance with the large deposits needed to get on the property ladder.
With all of this in mind, many are seeing the benefits of using a Deed of Variation to redirect funds, given to them by their parents when they pass, to their own children or even grandchildren. The funds can be passed outright or placed into a trust. A DOV may also reduce Inheritance Tax liabilities, though this varies depending on your circumstances.
While Deeds of Variation are proving extremely useful for some families, it is worth noting that they should not be relied upon as a form of estate planning. If you have specific wishes for who should benefit from your estate, a professionally drafted will is always the best solution. For effective distribution of your estate upon your passing, you should ask a solicitor to draft a will to reflect your wishes.
To speak to a solicitor to draft or amend your will or to discuss the possible use of a Deed of Variation, please contact our experts at Farleys on 0845 287 0939 or submit your enquiry through our online contact form and a member of the team will get in touch with you.