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Do you really know who will benefit from your Estate?

Man in deep thought, discussing with professional

As we’ve all been reminded of in the news this week – sometimes families fall out. Whilst most people don’t then go on and have an interview with Oprah, like Harry and Megan’s estrangement from the Royal Family, most, if not all, family disputes are very complicated.

At Thorntons, we have seen some family fall outs turn very unpleasant for all concerned.  This distress can be reduced by some forward planning.

Sometimes relationships break down so irretrievably that parents feel they have no option but to cut children out of their lives entirely, but what about out of their will?

You may have heard a number of things about parents disinheriting children and that it is “not legal” in Scotland, and to a point this is true.

When someone dies, what happens with their estate is dependant on a number of factors, but principally on whether or not the person had a will.

If you live in Scotland and find yourself in a situation where you feel you don’t wish a child to benefit from your estate after your death, but you died before making a will then your whole estate is divided using what we call the rules of intestacy.

These are complicated rules which determine who is entitled to what when a person dies, and with the rules being created by an Act of Parliament, they are subject to change whenever the government decides and you could find that the whole, or a very large part of your estate ends up going to someone who you really rather didn’t get anything.

 

George's Example

To give an example, George is Scottish and is domiciled in Scotland. He dies having fallen out with his son John, George’s wife had died some years before. George’s only assets were his bank account with £10,000 in it and his house worth £200,000. George never made a will.

George and John had fallen out a long time ago and hadn’t seen each other in years. George really wanted his estate to go to his daughter Jane who had always been there for him, particularly as he got older.

Because George never made a will, the rules of intestacy mean that Jane and John are equally entitled to the whole estate, or £105,000 each, regardless of how George felt about John.

The starting point for George, or you if you find yourself in a similar situation, would be to put a will in place.

There are many DIY will packs and will writing services these days, but particularly in a circumstance like this you really need to seek specialist advice from a Solicitor because in Scotland what will often throw a spanner in the works is a thing called Legal Rights.

In short, Legal Rights are rights that a spouse/civil partner and children have over the decease’s movable estate, that is to say any money whether it be in cash or a bank account, any shares or investments, and any furniture and jewellery etc. However the rights are only over the movable estate, and not any heritable estate like the deceased’s home.

The exact amount of the entitlement can be a bit complicated to work out and is dependant on if there is a surviving spouse or civil partner, or other children however the entitlement can be up to 50% of the movable estate.

Legal Rights cannot be stopped by a will, however a will can limit how much can be claimed.

Going back to our scenario, if George made a will setting out that he wanted Jane to receive everything on his death, John could still enforce his Legal Rights but now he can only claim £2,500.00, and Jane gets the rest of the estate, or £207,500.00.

This is definitely an improvement on the first scenario, however by taking the time and seeking expert advice from one of our team, we could have helped George further with estate planning and rearranging his assets in such a way that John would be entitled to next to nothing, or so little that it wouldn’t be worth the expense to him to make a claim.

Planning for Legal Rights and intestacy doesn’t have to even be limited to family fallouts. You may simply feel that you’ve given more financial support to one child over the other in life and want to address this in death without that child being able to use their Legal Rights to override your wishes.

The key thing with succession planning is to be prepared and the sooner you speak to a Solicitor the more time you have to make arrangements and give you peace of mind that your estate will be dealt with the way you would have wanted.

 

Making a Will can be quick, easy and relatively inexpensive compared to dying without one.  It is generally a very simple process, and most Wills are straightforward. Morna Coutts is a Partner in our specialist Private Client team. For more information about Wills contact a member of our private client team to make an appointment today.

About the authors

Morna Coutts
Morna Coutts

Morna Coutts

Partner

Wills, Trusts & Succession

Cammie Mathieson
Cammie Mathieson

Cammie Mathieson

Trainee Solicitor

For more information, contact Morna Coutts or any member of the Wills, Trusts & Succession team on +44 131 322 6168.