Succession law changes in Scotland should prompt clients to review personal affairs
Brodies' private client specialists discuss the significance of the Succession (Scotland) Act 2016, and comment on further changes to succession law in Scotland that are being considered by the Scottish Government.
The Succession (Scotland) Act 2016, which came into force on 1 November 2016, has introduced some significant changes to the law that governs the distribution of estates on death.
The biggest change
Perhaps the most noteworthy change relates to wills that make provision for ex-spouses and civil partners.
Previously, divorce or dissolution of a marriage would not automatically invalidate a will which made provision for an ex-spouse/civil partner. However, it is now the case that unless a will expressly states otherwise, divorce or dissolution of a civil partnership will revoke any provision in a will for the ex-spouse/civil partner. This brings Scotland in line with England and Wales.
For those with wills, a change in personal circumstances should always prompt a review, but that is even more important now.
More reforms ahead
Further proposals put forward by the Scottish Law Commission (SLC) as part of the second consultation on reform of succession law have the potential to affect an even larger number of people.
These proposed new rules relate to the division of an estate where an individual dies intestate, new rights for unmarried (cohabiting) partners, and the rights of children, spouses and civil partners not to be disinherited.
In Scotland, the concept of 'legal rights' prevents a testator from disinheriting a spouse/civil partner or children who have an automatic claim to part of the testator’s estate, irrespective of whether the testator dies with or without a will, and regardless of whether the testator has made provision for them in their will.
Currently, legal rights can only be claimed from the deceased’s movable estate (i.e. everything aside from land and buildings). However, with a view to simplifying the current position, the SLC proposes to replace legal rights with a new 'legal share' which, controversially, would apply to all of the deceased’s property including land and buildings.
The proposed changes to legal rights are most likely to affect farm and estate owners, therefore, careful and early succession planning is advised to ensure that the property is passed down to the next generation.
Given that the deceased’s land and buildings are likely to constitute the most valuable asset in their estate, these changes, if implemented, could force the sale of assets to satisfy a legal shares claim, although the SLC has recommended that it should be possible to apply to the court for the legal share to be paid in instalments to avoid this situation.
The proposed changes to legal rights are most likely to affect farm and estate owners, therefore, careful and early succession planning is advised to ensure that the property is passed down to the next generation. Despite the instalment option, the changes could still threaten this objective, particularly where an estate is asset-rich but cash-poor.
Although the second consultation is still on-going and succession law does not feature as an item on the Scottish Government’s legislative programme for 2016-17, it is anticipated that further changes to Scots succession law will be implemented in the future.
Brodies will be monitoring and blogging about these changes as and when they occur. In the meantime, it is advisable to have an up-to-date will, and to seek professional advice at an early stage, particularly where your personal circumstances or asset portfolio are not straightforward.
For more information, contact Susanne on 0131 656 0218 or at firstname.lastname@example.org or visit Brodies.com.
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About the authors
Susanne Beveridge is a Partner with Brodies LLP and Nicola Neal is a Senior Solicitor with Brodies LLP.
Susanne specialises in private client work, is accredited by The Law Society of Scotland as a specialist in Trust Law and is a member of the Association of Taxation Technicians. Susanne advises on a variety of asset protection matters including wills, estate and succession planning, inheritance tax advice, formation, management and termination of trusts, charity law, powers of attorney, guardianship and intervention orders, planning for nursing home care costs and the administration of executrices.
Nicola specialises in private client work and is involved in a broad range of work including wills, powers of attorney, trusts and estate planning. Nicola has a particular interest in contentious private client matters, including challenges to the validity of wills by disappointed beneficiaries, claims by cohabitants on death, and administering judicial factories. Nicola is a member of the Society of Trust and Estates Practitioners.
About the company
Brodies is the Scottish-headquartered law firm offering clients the largest specialist legal resource in Scotland, delivering services of the highest quality to Scottish, UK and global organisations.
With offices in Aberdeen, Edinburgh, Glasgow and Brussels, Brodies offers legal advice to private and public sector clients in core areas such as mergers and acquisitions, business disputes, commercial property, banking and financial services, employment, pensions and benefits and trust and tax.
Clients include big companies, small and medium enterprises, entrepreneurs, business people and individuals from all backgrounds who are active in almost every sector of the Scottish economy.
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The views expressed are those of the author and not necessarily those of ICAS.