The Succession Reformation? Perhaps not yet!

Reform to succession law in Scotland moves slowly, writes private client partner Gillian Campbell.

4 June 2019

Succession law in Scotland moves slowly, as evidenced by the fact that the current legislation was enacted in 1964. It has been 10 years since the Scottish Law Commission published its Report on Succession and it wasn’t until 2015 that the Scottish Government consulted on the recommendations made in that report. It was clear then that there was insufficient consensus on a significant number of the recommendations for the Government to take any of them further. It appears, therefore, that the blame for lack of progress cannot be laid entirely at the door of the politicians.

Where public views are split on an important matter, a decision to maintain the status quo is often necessary. This is what happened with testate succession, where the deceased left a valid will. Although the current scheme of Legal Rights attracts criticism, the Scottish Government took the decision not to bring forward reforms. It concluded from the public’s responses that the current Legal Rights scheme does have the benefit of striking a balance between testamentary freedom and the limited protections for spouses and civil partners, and children. To the relief of the farming community in particular, the legal position remains that a distinction is made between heritable property (land and buildings) and moveable property (everything else). Spouses or civil partners and children still have an automatic entitlement to a share of the deceased’s moveable assets, whether or not they were included as a beneficiary in the will. However, where they were included in the will, they have to decide whether to accept the will bequest or accept their legal rights (whichever is more advantageous).

The Scottish Government recently consulted again, this time on matters of intestate succession, where the deceased died without leaving a will. The key area of focus was how an estate should be split where there are both a surviving spouse or civil partner and children. Views on a fresh approach to reform were sought, with reference to alternative regimes found in other parts of the world. The consultation also sought views on extending an alternative approach to cohabitants and their rights on intestacy. The ‘Consultation on the Law of Succession’ closed for responses on 10 May 2019 and the Government’s Report is awaited with interest. It can still be found on the Scottish Government’s website.

At present under the Scots law of intestacy, a surviving spouse or civil partner is entitled to an interest in the family home in which they lived up to the value of £473,000; furniture worth up to £29,000 and cash up to £89,000 where there are no children, or £50,000 where there are children. In addition, a surviving spouse or civil partner is entitled to one-third of the remaining moveable estate and the deceased’s children are entitled to share one-third of the moveable estate between them. The remaining one-third of the moveable estate and any other heritable estate passes in terms of provisions in the Succession (Scotland) Act 1964 setting out the order of division, with children taking priority over other classes of relative.

The current rules were criticised by the Scottish Law Commission because of their complexity. It expressed concern that a deceased’s children could be disinherited where there was a second marriage. In the consultation, two different approaches were examined from intestacy models found in Washington State, USA and British Columbia, Canada.

The Washington State model is similar to the Scottish system that operates for divorcing couples. The deceased’s assets are defined as either “community property” (acquired during the marriage) or “separate property” (acquired by one spouse before the marriage, or during the marriage by third party gift or inheritance). Where there are children, the surviving spouse is entitled to the deceased’s share of the community property and one-half of the separate property. Where there are no children, the surviving spouse is entitled to three-quarters of the separate property and surviving parents and siblings take the remaining one-quarter. If there are neither children, nor parents or siblings, the whole estate will pass to the surviving spouse.

The British Columbia model includes cohabitants of two years within the definition of “spouse”. The entitlement is to a preferential amount of $300,000 and the household furniture when all children are the children of both spouses. If the children of the deceased are from a different relationship, the amount is $150,000 with the remainder being distributed to the children. The spouse has a right to buy the family home.

In its consultation, the Scottish Government produced an interesting set of proposals. It had taken the time to commission research and use ideas from other countries to take a fresh look at the reform of succession law. However, given the pace of reform that we have come to expect and the current political climate, we may have to wait some time before any proposed changes take effect.