HM Insights

Where there is no Will, what is the way forward for dividing an estate?

It has long been mooted by law practitioners and legislators alike that an overhaul of the principles of intestate succession – where someone has died without a Will - should be carried out. A symposium at Edinburgh Law School took place on 11 October 2019 that saw contributors highlight a number of the most contentious and difficult-to-navigate principles of intestate succession.

The Scottish Law Commission (SLC) launched a consultation in February 2019 which was designed to take a comparative look at the Scottish regime compared with other jurisdictions. The Scottish Government has announced that a response will be published in spring 2020.

Against this background, one cannot escape the question - why have all of the SLC recommendations on intestacy over the years, from as far back as 1990, remained unimplemented?

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What are the main issues that Scottish intestacy laws fail to address?

  • The ability to create a fair distribution of assets that would satisfy both small and large estates from one set of intestacy laws.
  • Consideration of societal change and expectation.
  • Striking the right balance between the rights of the surviving spouse/civil partner and the children of the deceased.
  • Competition between a first and second family.
  • Exclusion of step-children.
  • The connection between the laws regulating the dissolution of marriage on death and on divorce.
  • The protection of the interests of cohabitants as well as those of the wider family.

When did prior rights become the only rights?

The Succession (Scotland) Act 1964, sections 8 and 9, created the prior rights of a spouse to inherit from the estate of their late husband or wife. This was principally to allow a spouse the right to remain in the matrimonial home, with the furniture and plenishings and a cash entitlement, all of which would be up to a certain value. The value has been increasing over the years with the result that for small and medium estates, the prior rights of a spouse exhaust the entire estate with children only benefitting from very large estates.

The rise in the value of average Scottish house prices has precipitated the increase in the house element of prior rights so as to avoid prejudicing surviving spouses wi reside in high-value areas. The knock-on effect is that prior rights exhaust the lower value estates thereby limiting the distribution of an intestate estate to this one set of rights afforded only to the surviving spouse.

This will continue to be the case if the primary indicator is based on a housing market and the unrealistic expectation of continual growth. In addition, it could also create the situation where children will have a right to claim legal rights from the estate of a parent that died testate, but have no such claim on intestacy.

It would appear that the SLC proposals have always sought to allow a surviving spouse to benefit entirely from a modest or low value estate and for children to share in a high value estate. This can produce anomalous results.

What do people expect to happen to their estate if they die without making a Will?

According to various studies the general and, most basic, consensus appears to be that:

  • Parents, for the most part, wish to leave an inheritance to their children.
  • Spouses often do not look at transfers between them as inheritance. Rather, the surviving spouse is receiving assets that both have acquired and/or benefitted from during lifetime and is acting as a custodian for their children.
  • Most would not wish a second spouse to inherit at the expense of children from a first marriage.

Make a Will

Given all of the above, the only way to ensure that your estate is divided in accordance with your wishes and include the people you want to benefit is to make a Will.

Our team is experienced in all aspects of making a Will and succession/inheritance issues. If you'd like assistance in sorting out your affairs, please get in touch.

 

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