Changes to Scottish Succession Law & what they mean to you
The law in Scotland governing the distribution of an individual’s personal estate has remained largely unchanged since the Succession (Scotland) Act 1964. However, with recent changes made (namely the Succession Bill) it is important to understand the effects of the distribution of your estate, should you die without a Will.
The Succession (Scotland) Act 1964 set out the distribution of an individual’s estate if they were to die with no Will in place. Common law also provides a degree of protection from disinheritance under the deceased’s Will for the deceased’s surviving spouse and children.
It is widely accepted that Scottish succession law has been in need of reform for several years and this has been highlighted by the Scottish Law Commission's Reports in both 1990 and 2009, which form the foundations for the proposals now being put before the Scottish Parliament.
In November 2014, the Scottish Government announced that they would introduce a Succession Bill to ensure that the law in this area is ‘fairer, clearer and more consistent.’ While this is the aim, some of the changes proposed are likely to require many of us to review the terms of our Wills and so-called succession plans.
There are too many detailed proposals to discuss with any merit here, however, some of the more interesting changes being put forward are that any provision contained in a Will for a former spouse would now be automatically revoked by divorce unless the terms of the Will specifically provide otherwise - this would also include the appointment of a former spouse as Executor. Currently divorce would not render these provisions invalid and this can lead to some unintended and undesirable outcomes after death.
Following on from the Supreme Court case of Marley v Rawlings & another in 2014, there is a proposal which would allow the Scottish Courts to be able to rectify a Will within six months of the date of death, providing certain criteria are met. It is not clear how this would fit in with Deeds of Variation or how a rectified Will would be taxed.
The new Bill provides that, where a legatee under a Will dies between the Will being made and receiving the legacy, the legatee’s children and remoter descendants would step into the shoes of the deceased legatee and inherit that legacy in their place, unless the Will expressly precludes this. Currently, this rule only applies to legacies bequeathed to the testator’s children, nieces or nephews, but the Bill would see this rule widened to include any beneficiary.
With regard to foreign property, the EU Regulation on Succession (the Regulation) (commonly known as “Brussels IV”) came into force on 17 August 2015. The UK (with the agreement of the Scottish Government) will not be party to the Regulation. However, the Regulation is still important and may affect the owners of homes in, for example, France, Spain or Italy. Advice should be taken about the interaction of the Regulation with a Scottish Will where assets are held in a European country that has adopted the Regulation.
A feature of Scottish Succession law is the protection of spouses and children from disinheritance. They would still have a claim against an Estate despite any terms in the Will to the contrary. This claim is known as “legal rights” and is valued with reference to the value of the deceased’s moveable estate (that is everything which is not land or property) at the date of death. This means that the testator is free to leave their heritable property (land and buildings) to whomever they wish. Currently, a surviving spouse is entitled to one-third of the net moveable estate where there are surviving children with the proportion increasing to one-half where there are no children. Children are also entitled to claim the same proportions in the deceased’s net moveable estate with the level increasing again from one-third to one-half if there is no surviving spouse. Legitimate, illegitimate and formally adopted children are all given the same rights to the deceased’s estate. A formally adopted child may, however, only claim their legal rights over their adopted parents’ not their natural parents' estates.
The Scottish Government have indicated that they would wish to remove the distinction between heritable and moveable property. This would have a significant impact on this protection from disinheritance and calculations would be based on the total value of the deceased’s estate.
As mentioned earlier, the new and proposed changes are a bid to ensure that the law in this area is fairer, clearer and more consistent. The plan is to radically overhaul the current law in this area. Whilst succession law in Scotland is in need of modernisation, some of the proposals are more controversial and will mean that people will need fresh legal advice in order to make informed decisions about the distribution of their estate after they have died.
The Succession Scotland Bill was introduced in June 2015 and details can be found at Scottish Parliament