Posted on Sep 12, 2017 in Private Client by Graeme Dickson
A commonly held belief is that a person can give their worldly assets away on death to whoever they like. Sadly the law makes it more complicated.
There were reports in the FT recently highlighting that in England & Wales, the number of significant disputes, involving unhappy relatives and inheritances, which end up in court is on the rise. The law on this subject is different in Scotland and in some ways creates some interesting additional challenges.
While we are not seeing as noticeable a rise in court challenges in Scotland, there is certainly an increasing trend for relatives being prepared to highlight their displeasure when a Will is not as generous to them as they expected. We’re especially seeing these arising following second marriages where children from an earlier relationship perceive “their inheritance” has been given to the “new” family and more generally as modern family relationships become more complex. As parents live longer and children become (due to financial circumstances) more reliant on an expected inheritance, the scope for disagreements grows.
In England, generally you can disinherit relatives and the law will not intervene provided you have legal capacity. There are however statutory provisions which allow an unhappy individual to go to the High Court and ask it to make an award in their favour. The grounds for making such an application are limited and covers situations where someone has been disinherited or not been left as much as they argue they need. Such applications can be expensive and success is not guaranteed but there have been some very high profile cases including a recent one that went all the way to the Supreme Court.
In Scotland, we follow a different legal path. The scope to challenge a valid Will, even if you dislike its terms, is much more limited. Just because a person believes the terms are unfair and leaves them with less than they would wish, that is not enough. But the law does say that you cannot completely disinherit a spouse / civil partner and/or children. This principle applies both to people who have a Will and those who die without having put a valid Will in place (so-called intestacy). So even if a person puts different provisions in their Will, these wishes can be undermined by a claim from a spouse/civil partner and/or offspring.
A spouse / civil partner has the option to claim one third of a deceased’s moveable assets (i.e. everything owned excluding any heritable property e.g. houses and land). Children are entitled to claim a share of a separate one third fragment of the estate. If there is no spouse / civil partner or no children, the extent of the right increases. These are called a person’s “legal rights” and can (where appropriate) be claimed as an alternative to a person’s entitlement (if any) under a Will. That said, the rights don’t need to be claimed - often in stable family relationships, a Will can skew an inheritance towards specific individuals, sometimes for tax reasons and those involved are happy with the provisions. In these cases, the legal rights are just not claimed.
One notable point, in Scotland, is that a cohabitee has no right to claim Legal Rights. There are provisions to assist cohabitees if there is no Will, but unless the deceased did not leave a valid Will, a cohabitee could therefore be left with nothing. So for those living together (but not married / in a civil partnership), this is a significant potential gap in the protection for those in committed, albeit non-formalised, relationships.
My colleague, Graham Lambert, highlighted the importance of having a valid Will. It is just as important to make sure your Will achieves what you want it to, in light of the overarching provisions of the law. There are ways to mitigate the effect of the law but they have to be carefully planned. Individuals are always best to get professional advice to ensure that their Wills actually do what they are meant to do and sometimes that needs to be combined with other actions to be taken during lifetime. With proper planning individuals can ensure that the inheritance they leave is not unexpected family acrimony!
Graeme Dickson is a solicitor in our specialist Private Client team, with expertise in advising on Wills, contested executries and inheritance tax planning. If you would like to discuss your own plans and how to achieve them, contact Graeme at firstname.lastname@example.org on 01334 477107, or alternatively contact a member of the Private Client team.