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BLOG - New intestacy laws and their impact on Scotland

Partner, Tessa Till, comments on new intestacy laws in place in England and Wales and how this reflects the situation in Scotland.

Tessa Till,

Partner at Pagan Osborne, discusses new intestacy laws in England and Wales, and how this may impact on Scotland.

New rules which came into force last week in England and Wales in relation to inheritance law highlight the pressing need for reform north of the border.

The Inheritance and Trustees’ Powers Act marks an important move in intestacy laws which have been subject to much discussion throughout the UK.

In England and Wales, the provisions relating to those who died without a Will were outdated having not been changed for over 100 years. The position of the surviving spouse or civil partner is now greatly improved. The surviving spouse or civil partner will now inherit the entire estate if there are no children, and if there are children they will inherit the personal chattels, a fixed sum of £250,000 and half of the remainder of the estate outright.

In addition, adopted children now have a right to their parents’ estates following the parent’s death and prior to adoption by someone else. There is now also a legal entitlement for step-children who are afforded access to their step-parents’ assets.

It is important the law continues to evolve in order to reflect modern life. These changes go some way in reflecting the diverse range of familial situations that are more common nowadays. There is a danger this further complexity will result in an increase in disputes, however the benefits are likely to outweigh issues faced by the majority of families faced with dealing with an estate which is not subject to a Will. The implementation of this new Act brings Scotland’s handling of the intestacy issue to the fore.

Scotland’s current act for dealing with the estates of those who die without a Will was implemented 50 years ago. The Succession (Scotland) Act 1964 set out provisions to avoid disinheritance of children from previous marriages – this was progressive for its time but as society has continued to evolve, the law has not. Scots law allows for the automatic entitlement of a spouse or civil partner upon death in what is termed ‘prior rights’, giving them a fixed right in the main home up to the value of £473,000, personal chattels up to the value of £29,000 and a fixed cash sum. They also have an automatic entitlement to ‘legal rights’ which are only applicable to a proportion of the moveable estate (generally estate other than land and buildings). Children also have an automatic entitlement to ‘legal rights’. The remainder of the estate is distributed in order of preference of surviving family members beginning with children, and ultimately the Crown.

In recent years there has been a lot of discussion but little action about reviewing the rules. The Scottish Law Commission produced a report in 2009 but nothing has happened in the intervening five years.

Intestacy laws need to ensure the fairest outcome for loved ones of the deceased. With a reported 70% of people failing to make a Will before they die, intestacy is a significant issue. In an ideal world, everyone would have a Will in place but this is simply not the case. While intestacy rules can protect the deceased’s loved ones to an extent – it is by far better to have a Will in place. There can be no real one size fits and suits all solution. Intestacy laws can only go so far in providing a blanket approach in dealing with the estates of those who die without a Will. Further understanding is needed so people are aware of the consequences and potential legal headaches for their loved ones of dying intestate and the ease in which drafting a Will could eradicate this and establish a lasting legacy.

Intestacy rules in Scotland are widely regarded as outdated and overdue for review. I would urge we use the changes in effect in England and Wales as a spur to action to review our system.

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