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Scottish Succession Law – What Next?

Scottish Succession Law – What Next?

Fiona Clarke

The law on succession in Scotland, which deals with the rules around inheritance, has been the subject of review, consultation and discussion for almost 30 years.  In 2016, a new piece of legislation (the Succession (Scotland) Act 2016) introduced a number of updates – largely technical amendments, rather than radical changes.  Separately, in 2015 the Scottish Government carried out a consultation on more substantive changes to the law in this area.  The response to that consultation has now been published by the Scottish Government.

The main topics covered are undoubtedly the most controversial in this area of law – who should inherit when someone dies without a Will (the law on intestacy), if and how spouses, civil partners and children should be able to claim part of an estate when the Will does not provide for them, and what rights cohabitants should have. 

Intestacy

Intestacy rules apply when a person dies without having a valid Will in place, and these rules determine who inherits the deceased’s estate.  Under current law, a spouse / civil partner has “Prior Rights” which apply first, entitling them to the home in which they are living (up to a value of £473,000), furniture (up to a value of £29,000) and a lump sum of either £50,000 (if the deceased left children) or £89,000 (if the deceased did not leave children).  After Prior Rights have been satisfied, “Legal Rights” then apply to the remaining estate – entitling the spouse / civil partner to one third of the moveable estate if there are no children, and one half if there are children.  The children are similarly entitled to one third of the moveable estate if there is a spouse, and one half if there is no spouse.  After satisfaction of Legal Rights, the remainder of the estate passes in accordance with a list of priority, set out in the Succession (Scotland) Act 1964 – importantly, children top that list, followed by siblings / parents – who take priority over a spouse / civil partner.

There were a number of proposals brought forward by the Scottish Law Commission to simplify the rules on intestacy and to update them to better reflect modern society and family life.  Of the proposals made, two have been noted as having been uncontroversial, and therefore the Scottish Government proposes to implement those in future succession legislation.  Those are (i) if there are no children, the surviving spouse / civil partner should inherit the whole estate, and (ii) if there is no spouse, then children should inherit the whole estate. 

It remains unresolved as to the best solution for dividing an estate on intestacy when there are both a surviving spouse / civil partner and children, and the Scottish Government have indicated that they intend to consult further on this aspect, to seek reform in this area which is in line with the expectations of modern families in Scotland.

Protection against disinheritance

Scots law currently has rules which are intended to prevent spouses / civil partners and children from being disinherited under a Will.  Those rules entitle spouses, civil partners and children to Legal Rights – an entitlement to a specific portion of the deceased’s estate, irrespective of the terms of the Will.  Where a person dies leaving both a spouse / civil partner and children, then the spouse / civil partner is entitled to claim the value of one third of the net moveable estate (generally, moveable estate being everything other than houses, land, buildings) and the children (as a class) are similarly entitled to the value of one third, between / among them.  If a person passes away leaving either a spouse / civil partner or children, then that spouse / civil partner or those children are entitled to claim the value of one half of the net moveable estate.

The consultation identified that there is a considerable lack of consensus on a suitable alternative to the current system.  Respondents on the consultation were largely agreed that a spouse / civil partner should be protected from disinheritance, but otherwise divided on whether or not children should be afforded that protection, and what proportionate share or fixed sum would be appropriate in either case.  The Scottish Government has concluded that they will not be bringing forward any reforms in this area so, for better or worse, Legal Rights are here to stay!

Cohabitants

Under current law, if a person dies intestate (without leaving a valid Will) then under the Family Law (Scotland) Act 2006, a cohabitant may made a claim on their deceased cohabitant’s estate.  Where the deceased left a Will, a cohabitant has no such rights. There was consultation on refining the process which the court use to make decisions in these cases, however a lack of consensus has meant these proposals will not be brought forward at this time.  The report does confirm that the Scottish Government does intend to legislate to increase the time limit for making a claim from 6 months, as it currently is, to 1 year.   It also confirms that there is no intention to introduce rights for cohabitants to claim on a testate estate (where there is a valid Will in place).

The outcome is perhaps not as radical many will have hoped, with the most controversial areas of law remaining unchanged.  Consultation on many issues will continue, with the hope that a reformed set of rules can be achieved, which truly reflect modern society.

Fiona Clarke
Senior Associate

LChalmers