Legal change ‘will rob thousands of their inheritance’

THOUSANDS of children could be robbed of their inheritance by a little-debated change to Scots law to be introduced next month.

Legal experts say children whose parents have remarried and who subsequently die without making a will could have their rights “removed by the back door” under the new legislation.

The change, announced last month by the Scottish Government, involves a massive 58 per cent increase in the amount of money a spouse is entitled to when their partner dies intestate. Experts fear this will leave little or no money for the deceased’s children from earlier relationships.

They claim the move threatens to affect the financial position of thousands of families at a time when second marriages are now commonplace. Figures suggest that approximately 17,000 homeowners in Scotland die without a will every year, of which 25 per cent will be on their second marriage.

Under Scots law, the financial position of a spouse is protected when their partner dies by entitlement to part of the value of the couple’s house, some of the contents and a small cash amount. The rest goes to the children of the deceased.

In 2005, during the house price boom, the Scottish Government raised the level of entitlement from £130,000 to £300,000, and next month, despite the static housing market, it will be raised again to £473,000. However, this sum is now almost two-and-a-half times the average value of an estate in Scotland.

It means that children from a first family are highly unlikely to get any financial legacy as all of the deceased’s estate – property and financial assets at time of death – will pass to a new partner. When he or she dies, the estate would flow to the couple’s new children.

Opponents say the repercussion for first families is an unintended consequence of raising the level of Prior Rights, the law that protects the rights of a spouse in the event of the death of their partner without a will. Some experts and consumer groups also claim the new rules, which were announced by Legal Affairs Minister Roseanna Cunningham, were passed without proper parliamentary scrutiny.

Dorothy Reid, a law lecturer at Glasgow University, said: “Roseanna Cunningham has described this as a small change. It is not. Inheritance rights are being removed by the back door. This change will affect almost every family in Scotland, and in my view is a recipe for family conflict. It has not been thought through by the SNP Government. Nor has it been subject to any Parliamentary scrutiny.

“What this means is that in almost all intestate estates the Prior Rights of the surviving spouse or civil partner will consume the estate and children will not inherit on the death of a parent who was married at the time of death.

“This is uncontroversial in a nuclear family. Most children would be happy for their surviving parent to inherit everything, but with a general expectation that on the death of the second parent any inheritance would pass to the children – that is how most families conceptualise inheritance.

“However, as we all know, Scotland’s families now take many different forms. The real competition here is between first and second families. If the father, say, has remarried and has not made a will, his second wife will be entitled to Prior Rights, with the strong possibility that children of the first family will not inherit. On the death of the second wife, her children will inherit everything.”

Professor George Gretton, of the School of Law at Edinburgh University, also insisted that the change in the law was wrong. “Our law says, as do many other legal systems round the world, that to disinherit one’s children by one’s ‘will’ is so morally unacceptable that it is prohibited. And yet in intestate succession the law does precisely this.”

The change to the law has also been criticised by the Scottish Consumer Council, which believes that since the average amount of ordinary estates fell in the past year by 3 per cent – from £204,000 to £197,000 – it was difficult to understand the need for such a huge rise. Sarah O’Neill, head of Policy for the SCC, argued: “Given the average value of estates in Scotland, the effect of increasing the Prior Rights limit is likely to be that very few children will receive anything from an intestate estate, where there is a surviving spouse.”

The Scottish Government consulted on the changes last year. But as the change to the level of Prior Rights was an amendment to existing legislation it was not subjected to debate in the Scottish Parliament. It passed through the subordinate legislation committee without challenge at the time from MSPs.

A spokesman for the Scottish Government said: “The changes to these limits have been informed by objective data and responses to our consultation exercise and will simply update existing law to take account of inflation in house prices since 2005. This will restore levels of protection which inflation has eroded for bereaved wives, husbands and civil partners who have lost their loved one and are left to face the consequences when no will has been made.

“However, this is a broad safeguard for when an individual has not left a will. We continue to urge that people with property and other assets should consider making a will to reflect their own individual circumstances and wishes. Preparing a will allows property to be distributed in accordance with each individual’s wishes and ensures that potentially complicated issues, such as the succession rights of children from a prior relationship, are addressed.”