Scotland has its own succession laws, which differ from the rest of the UK. One of the main differences is the doctrine of “legal rights”.
Many people think that if they have a will, that will dictate how their estate is distributed on death. If they are estranged from their spouse/civil partner or perhaps one or more of their children, they might think that they can safely exclude them from their will. However, it is not quite that simple!
Irrespective of whether you have a will, in Scotland, spouses/civil partners and children are entitled to claim a proportion of your estate.
What is included in the claim?
The claim only affects “moveable estate”.
Moveable estate is effectively everything except bricks and mortar, so in most cases, the value of your home won’t be included. All your savings and investments will be included. Importantly, if land/buildings are owned by a company, and you own shares in that company, then the value of those shares are included. Likewise, if you have shares in a business or have partnership interests, the value of those are taken into account.
In any estate planning exercise, it is therefore important to consider the likely impact of any legal rights claims. Even where you have a basic will leaving everything to your spouse, and there is no discord within the family, there have been many cases where children have opted to claim, much to the surprise of the surviving spouse.
Where significant business interests are involved, the implications can be far reaching.
How much is the claim?
This is dependent on whether you have both a spouse/civil partner and child/children at the time of your death. If so, the spouse/civil partner can claim one third of your moveable estate. Likewise, the children can claim one third of your moveable estate between them. If, for example, you have two children, they would each have a claim to one sixth of your moveable estate (1/2 of 1/3).
If you have only a spouse/civil partner at time of death, or only a child/children, the proportion which can be claimed goes up to one half of moveable estate.
What if I have already included the potential claimant in my will?
It is not possible for a potential claimant to both accept the bequest under the will and also claim legal rights – it’s one or the other. If their entitlement under the will is greater than their potential legal rights claim, it makes sense for them to abide by the terms of the will. If, however, they would do better out of a legal rights claim, they may choose to make the claim instead.
Does my executor have to advise potential claimants of the claim?
Yes.
Is there a time limit for claiming?
Yes – 20 years from death. It is therefore possible for potential claimants to delay the winding up of an estate whilst they consider their position.
Are there steps I can take to minimise a potential claim?
Yes – there are steps you can take during lifetime to reduce your moveable estate and therefore minimise the claim. We would always recommend detailed advice is taken so that you understand the implications of any proposed actions.
Should you wish to explore further, please contact Donna Brennan in our Glasgow office.