Time to address those tricky legacy issues

Review of succession act could zap your will, says Peter Shand

Even where a will is made, there may be legislative limits to its terms
Even where a will is made, there may be legislative limits to its terms

In the 1960s, an Act of Parliament was passed to regulate the succession of estates on death in Scotland.

The rules were formalised in the Succession (Scotland) Act 1964 and, after more than half a century, this act is still the piece of legislation in Scotland that governs how the law is applied on someone’s death.

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The legislation includes prescriptive rules about what happens if you die without a will and, as in other jurisdictions, it defines the order in which your estate will pass amongst your family if you do not have a will. Even more significantly, Scottish law is unique and differs from English law, in that it provides statutory rights for a spouse or children of the marriage to challenge a will if they have been excluded from it.

It is true to say that expectations about what should happen on someone’s death have changed as the demographic of families in Scotland has evolved over the past few decades. Typically, widows and widowers are surprised to find out that, in Scotland, they are not automatically entitled to inherit their spouse’s entire estate on death if the deceased failed to put in place a will, for example.

Indeed, the rules have gone unchanged, despite various proposals over the past 50 years to update them, most notably in the reports from the Scottish Law Commission in 1990 and, more recently, in 2009.

There are, however, now imminent plans to pursue reform of succession law in Scotland.

The Scottish Government has announced plans to do this in two stages, explaining that this is being done “to ensure that the law in this area is fairer, clearer and more consistent”.

The initial stage will implement a number of technical (and sometimes obscure) legal changes recommended by the Scottish Law Commission and widely supported by the legal profession.

The second stage of the proposed reforms is far more controversial and could result in a radical overhaul of the existing rules. The reforms will address issues such as these:

• What will happen to your estate if you die without a will?

• What protections will there be for a spouse/civil partner and children of the marriage if they have been excluded from someone’s will?

• What entitlement will a co-habitee have to claim on the estate of their partner, even although they are not married?

Significantly the Scottish Government has also expressed its intention to extend the scope of “legal rights” which exist to protect spouses and civil partners – and children of the marriage – from being disinherited under someone’s will.

Whereas the existing protections give certain rights in the moveable estate of someone who has died (in other words, the right to claim a percentage of someone’s moveable assets like investments, cash and furnishings), legal rights do not currently apply to heritable property (such as land and property, etc).

The proposal, which would present a great departure from the existing regime, would be to extend legal rights to all property owned by the deceased, whether that property is moveable or heritable.

The implications could be significant and lead to greater challenges under someone’s will if they omitted to include their spouse and children in the division of their estate.

This would certainly have financial implications and might require some individuals to take a fresh look at an existing will which had been drafted before the changes or as part of a wider review of their estate planning.

The Scottish Government will undertake a statutory consultation process before finalising any recommendations.

Peter Shand is a partner with Murray Beith Murray. www.murraybeith.co.uk