Lianne Lodge: Home truths about inheritance

IN THE recent leaders' debates, there was much commentary in Scotland that a lot of the issues related only to England and did not affect us here north of the Border.

This has highlighted the significant differences in public control and law between different parts of the UK. However, many people may not realise that where they live can have a significant impact on what happens to their assets on death.

This is significant, because more than half of UK adults have yet to write a will, according to a recent poll for charity Barnardo's, including three quarters of cohabiting couples. Yet few appreciate what will happen should they die prematurely, and how different laws apply throughout the UK. This is particularly relevant for those with family connections throughout Britain.

In Scotland, if you die without leaving a will, your spouse or civil partner would be entitled to the matrimonial home up to a value of 300,000, plus furniture of up to 24,000 and cash up to 75,000 if you have no children. If there are children, this figure is reduced to 42,000.

In simple terms, the spouse would inherit a third of the moveable estate, which basically means everything other than any land or buildings. The children would inherit any other land or buildings plus the rest of the matrimonial home if the deceased's share is over 300,000 and two thirds of everything else. If there are no children, this amount would be transferred to parents and siblings rather than the spouse inheriting the full estate. If there are no parents or siblings, then nieces and nephews would inherit the balance. Only if there are no children, parents, siblings, nieces or nephews would the spouse inherit the full estate.

If there is no surviving spouse then the children would inherit the full estate, or the parents and siblings if there are no children or a spouse.

If there is no will, a cohabitee (live-in partner) could apply to court for an award from the estate. The court could then award the partner an amount up to that which a spouse would have been entitled to. However, there are no guarantees, and as this is a recent change to the law there is a lot of uncertainty surrounding how inclined the courts would be to make such an award. The application must be made by the cohabitee within six months of the death.

In Scotland, even if you have a will, your children can still claim against your estate regardless of the terms of the will. If there is a surviving spouse, the children would be entitled to a third of the moveable estate between them, and if there is no spouse this would increase to a half share between them.

The law in England differs greatly to that in Scotland. For example, where there is no will and the deceased leaves a spouse or civil partner and children, the spouse or civil partner is entitled to the first 250,000 of a person's estate plus a life interest in half the estate over 250,000 plus all personal items. The children will then inherit half of the estate over 250,000 immediately and the other half when the spouse dies.

If there are no children, the spouse inherits the first 450,000 and the rest is divided between the parents if they are still alive, and if not it goes to the siblings.

As in Scotland, if there is no spouse but children then the children would inherit the full estate.

It is important to note that the law in Scotland in relation to succession after death differs greatly from that in England. That said, the tax position is the same throughout the UK and therefore inheritance tax would still be chargeable on the usual terms.

The answer is not always straightforward and I urge people not to be panicked into a hop across the Border. When it comes to deciding which law would apply, it is based on your domicile. This is more than simply your residency and will take on board factors such as where you were born, your parents' nationality, where you own property, where you consider home and your plans for the future.

The process of winding up someone's estate is also different depending on which country you are domiciled in.

Probate is a term a lot of people will be familiar with; however, this is an English term. Strictly speaking, a grant of confirmation is required in Scotland to begin to finalise someone's estate, and the procedure is very different in each country.

Confusion can be avoided if you have a will and it gives clarity as to who you want to inherit what.

Be careful, however, as the signing requirements differ in the two countries and if there is any question over where your estate would be administered it is always worth ensuring that your will is signed in a way that is acceptable to both countries.

• Lianne Lodge is a solicitor at Pagan Osborne