Earlier this year, 29th June 2015 the Scottish Government opened a consultation paper on the Law of Succession based on the SLC Report on Succession from 2009. It is argued that Scots Law in this area has been in need of reform for some time and does not accurately reflect modern society. Many of the changes more accurately reflect what many people believe what will happen to their estate when they die intestate. For example, most people believe that if they die without leaving a will, their spouse or civil partner will inherit their estate. However this is not the case, the law at present favours children over partners, with partners receiving the matrimonial home and a cash sum with children getting the rest. The proposed changes aim to make the laws of intestacy more modern and fair to partners.
What are the proposed changes to the intestacy rules?
The current law provides that where an individual who has passed away leaved behind a spouse or civil partner, the survivor will gain “prior rights” from the estate. Prior rights are made up of an interest in the home property, personal items and cash – each of which have a statutory value set on them. After prior rights have been settled, the surviving spouse or civil partner and any children of the deceased are awarded “legal rights”. Legal rights are a fixed share of of the deceased’s moveable assets. After these rights have been settled, the rest of the estate is distributed in line with the statutory intestacy rules. Depending on the estate and circumstances this may mean that a cohabitant may also claim a share of the estate.
However, the Scottish Law Commission (SLC) have made recommendations that modernise these rules, moving away from rights that are property specific. Instead the SLC recommend that the division of the estate be based on the value of the estate as a whole rather than divided into specific types of property. The proposed reforms aim to both modernise and simplify the executry process. This has resulted in the recommendation that the surviving spouse or civil partner inherit the entirety of the deceased’s estate, where there are no children or grandchildren and also that children or grandchildren inherit the entirety of the estate where there is no spouse or civil partner.
Where there is both a surviving spouse or civil partner and surviving children or grandchildren, the SLC recommends that the spouse should receive a lump sum, based on an amount to be set by statute, and then the rest of the estate will be split equally between the surviving partner and the children of the deceased. This deceased’s children will share one half on the estate between them. The recommendation of the SLC is to set the lump sum for the deceased’s spouse or civil partner at £300,000 however the Scottish government are looking to make this figure significantly more, with the consultation paper referring to between £335,000 up to £650,00.
In relation to legal rights, the consultation paper proposes that a surviving spouse or civil partner should be able to claim a fixed amount equating to 25% of the amount to which they would be entitled under the new intestacy rules outlined above. In relation to the legal rights of the deceased’s children where there is a will, the consultation paper outlines two potential routes. Firstly that the deceased’s children receive a fixed proportion of the entirety of the estate, suggested to be 25% suggested figure is 25% of what they would be entitled to in intestacy. All children of the deceased will be entitled to what is to be known as their “legal share”. The result would be that in estates that do not exceed the fixed sum that is to be awarded to a surviving spouse or civil partner, there may not be enough to meet the children’s claim. In order to remedy this, the court may make an order to pay a person’s legal share in instalments. The alternative proposal is that adult children are not entitled to make a claim on their parent’s estate at all, but that dependent children may apply for a payment. The level of this payment is to be determined on the child’s needs as well as the family’s lifestyle.
It will be interesting to see the rules when they are finalised and what effect this will have on intestate estates in the future. It will also be interesting to see how the law develops in the courts and the effect the changes in the law have in the level of litigation in this area, and how the courts will determine the rights of children in intestacy.