The results of the 2011 census revealed more blended and reconstituted families in Scotland than ever before, including over 70,000 stepfamilies with dependent children (a figure which we might reasonably expect to increase when the 2022 census results are made available). It is trite to say that family life in Scotland has changed immeasurably over the last 60 years, yet large parts of the law governing succession within the family have remained stagnant since 1964. Throughout the numerous attempts at modernisation, a central issue has been whether stepchildren should have rights akin to those of blood relations in determining the succession to an estate. So, what is the current position, and how might blended families approach succession planning accordingly?
The Status Quo
The Scottish concept of legal rights entitles biological and adopted children to a share of their parent’s net moveable estate (a portion of everything excluding land and buildings, after deduction of certain debts and expenses) even in the scenario where their parent has left a Will. These rights do not, however, extend to stepchildren, who have no right to automatic inheritance regardless of the circumstances.
While there has been some public support for analogous rights for stepchildren, there are no imminent plans to make such a change to the law. As is often the case in matters of family and succession, the preference among lawmakers for clear and simple rules continues to prevail over the possibility of a more nuanced (but undoubtedly, more complex) approach.
To many, the inability of stepchildren to make a claim on their stepparent’s estate will seem equitable on the face of it and, indeed, may even appear to be a reasonable protection for blood relatives. However, the rules can lead to some unfortunate and seemingly anomalous outcomes, as illustrated by the following example:
Consider a family made up A and B and their two children, C and D. B dies at a relatively young age and their entire estate passes automatically to A. A later remarries B2, who has two children of their own from a previous marriage, E and F. B2 never formally adopts C and D. Some years later, A dies without a Will and their entire estate (which includes the wealth they inherited from their first spouse B) passes to B2. Eventually, when B2 dies they provide that their estate (which, naturally, includes wealth inherited from A and, initially, from B) should go to their two biological children, E and F. B2 makes no provision for C and D. This result, which is entirely possible under current succession law, is that C and D miss out on an inheritance entirely.
It can reasonably be assumed that neither A nor B would have wished to see their children disinherited entirely, but this is just one example of how relying on the default rules of intestacy can lead to unfortunate results.
Providing for Family
While perhaps unsurprising, the simplest thing that A could have done to avoid the outcome outlined above would have been to put a Will in place, to ensure that their wishes were clearly expressed and capable of implementation.
Depending on the family circumstances and respective needs of their surviving spouse and children, the Will could have provided for a very simple division of their assets. This would have ensured that C and D received something from the estate of their parents, regardless of what B2 decided to do next.
However, in more complex family scenarios, more sophisticated options are available to provide for a spouse during the course of their lifetime, while ensuring an inheritance for children in the long run. For instance, a ‘Liferent’ provision can be included within a Will to allow a surviving spouse a right to live in and enjoy a family home, without the home (or the share belonging to the pre-deceasing spouse) ever forming part of their own personal estate. A further option is the inclusion of a more flexible discretionary trust, which allows the entire estate to be managed for the benefit of the surviving family by reference to a non-binding Letter of Wishes prepared by the deceased during their lifetime.
Of course, we should not forget that many stepparents have close relationships with their stepchildren during life and might wish to see them benefit from their estate. Again, in this scenario, making provision for the stepchild within a Will is the only way currently to ensure that these wishes can be implemented when the time comes.
It is difficult to overstate the importance of seeking professional advice around your succession plans, particularly if you are part of a blended family. If you wish to put a Will in place, or make any changes to an existing Will, our Private Wealth and Tax team are always happy to discuss which options might best suit your circumstances.