Gift to daughter before money available via a Deed of Variation

Trusts Discussion
1

Hi all,

My client is set to inherit from her mother and wishes to instead vary mother’s will and pass down a significant chunk to her own daughter, to enable daughter to buy a flat.

We’ve around 4-5 months before the 2-year time DoV limit runs out.

Daughter’s flat purchase is fast approaching, and granny’s estate isn’t in a position to distribute /advance her soon-to-be share. My client therefore wants to make the gift early (£100k) but we don’t want this to be deemed a PET, so I’m thinking a simple loan note could make it clear. Daughter could then receive her £100k from granny at the finalisation of the latter’s estate, and pay mother back.

However, any such loan may then be in breach of the mortgage terms as most lenders want to see a deed of gift! Said deed of gift suggests it’s a PET!

Has anyone dealt with this situation before? Would be grateful for your thoughts.

Many thanks.
Georgina Crane Sinha
Calibrate Law

2

There is nothing to stop your client executing the IoV now, of course. Perhaps with the comfort of that document, knowing that £100,000 is coming in from that source, the lender would be prepared to proceed on the basis of your client’s loan?

Alexander Learmonth
New Square Chambers

3

Many thanks, Alexander.

Kind regards
Georgina Crane Sinha
Calibrate Law

4

Further to the above the client could lend £100,000 to the executors of the estate (instead of the daughter) on terms that it is to be repaid when the administration is finalised. She executes a DOV at the same time, and daughter receives £100,000 with nothing to repay to anyone. That might be a better situation to present to the mortgage company.

Paul Davies
Clarke Willmott LLP

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