The launch of the Scottish Government’s Consultation on the Law of Succession was somewhat overshadowed by the Land Reform (Scotland) Bill appearing earlier last week (on which see discussion here and here). Succession reform has been on the agenda for a long time, however, with the proposals contained in the consultation paper dating back to a Scottish Law Commission Report from 2009. Although some of those proposals found their way into a fairly technical Succession (Scotland) Bill introduced earlier in June, the meat of the Commission report has been held over until now. The reforms suggested by the Commission are in some ways considerably more radical than anything in the current land reform discussion, aiming as they do to sweep away legal rules that have been in place since the 1300s. Laws of that vintage might usually be arcane and unheard of in practice, but for succession rules, nothing could be further from the truth. Unless our parents die penniless, and we do the same ourselves, succession is the one area of law that will inevitably touch all of our lives.
So what is proposed? The consultation paper sets out three main areas of reform, with a gallimaufry of “additional matters” covered in chapter 5. This blog post will focus on the first two (intestate succession and protection from disinheritance), with consideration of the third area (succession rights for cohabitants) to follow in a later post.
First up is potential reform of the law on intestate succession – in other words, what happens to someone’s property when they die without making a will. The headline proposal is that the distinction made between inheritance rights over land/buildings and other types of property should be removed, so that succession would no longer be “property-specific”. This is significant in land reform terms since, under current rules, land/buildings do not form part of the property over which all children have protected inheritance rights: as Lallands Peat Worrier put it, there is nothing to stop a father leaving his country estate to his first son, who leaves it in turn to his first son, and so on forever. Curiously, the consultation paper makes no mention of the land reform agenda in this connection, the proposal being tied rather to the broader policy aims of simplifying succession rules and achieving a “fair” outcome for all family members.
If the Commission’s proposals are accepted, the new rules would be:
- Where someone dies leaving a spouse (or civil partner, please take that as read for the rest of the post) but no children (or grandchildren, great-grandchildren etc) , the spouse inherits everything;
- Where someone dies leaving children but no spouse, the children inherit everything;
- Where someone dies leaving a spouse AND children, the spouse receives a threshold value of property, and anything remaining after that is split in two, with half going to the spouse, and the other half divided between the children.
The value of the “threshold sum” is a matter of some discussion in the paper, with suggested figures ranging from a minimum of £335,000 to a maximum of £650,000, justified by reference to recent Scottish house prices and the current regime of prior rights claimable by a spouse in intestacy. The government support the Law Commission policy objective that a surviving spouse should generally be able to retain the family home (also an objective of current succession law), and some time is spent considering the correct approach where the family home is worth more than the threshold sum. Since 94% of Scottish properties are valued lower than even the minimum proposed threshold sum, however, and many of those worth more than £335,000 will actually be owned in common by spouses, the number of estates where the threshold sum prevents the surviving spouse remaining in the family home is likely to be extremely small.
The second main area of consultation relates to protection from disinheritance. This is relevant where the deceased has left a will, but it contains no provision (or relatively meagre provision) for their spouse and/or children. At present, the spouse of a deceased is always entitled to inherit at least one third of the moveable property (anything that isn’t land and buildings) even where the deceased has specifically excluded the spouse in the will. This proportion rises to one half of the moveable property if there are no surviving children. The same rules apply for children – entitled to share a third of the moveables as the “bairn’s part”, rising to half if there is no surviving spouse, regardless of their exclusion from the will.
Following on from the proposals on intestacy, the Commission again propose that succession rights here should no longer be property-specific. A surviving spouse would instead be entitled to a “legal share”, calculated as 25% of what they would have received on intestacy. So far, so non-controversial, assuming you are on board with removing the property-specific aspect of inheritance claims (a bold assumption.) In respect of children, however, there is more scope for argument. The Commission offer two models, without offering an opinion on which is preferred.
In option one, children, like spouses, would be entitled to a “legal share” of 25% of what they would have received on intestacy. Two potential problems have been raised here. Agricultural stakeholders have pointed out that where the huge majority of a deceased’s estate is made up of one asset, such as a farm, parcels of land may need to be sold off to pay a legal share claim, and this may compromise the viability of the business as a whole. This difficulty arises from the proposed abolition of the property-specific nature of children’s inheritance rights. Specific consideration is given to this issue in chapter 3A of the paper, including consultation on whether agricultural units should be exempted from the legal share regime. The other potential problem is that under the proposed new intestacy rules, where the deceased’s property as a whole is worth less than the threshold sum, the legal share to which children are entitled would amount to zero. Children could effectively be disinherited.
That concern is amplified in relation to the considerably more radical option two. Here, the inheritance rights of adult children would be abolished entirely, with dependent children (those under 18, or under 25 in full-time education or training) given a right to claim a capital sum calculated on the basis of what is required to maintain that child until they are no longer dependent. In other words, the claim would amount to posthumous payment of a parent’s obligation to aliment their children under the Family Law (Scotland) Act 1985. Straightforward disinheritance of adult children as a matter of law is a significant break with Scots legal tradition, and this proposal caused some consternation when the Commission’s report was originally published. The government adopt the Commission’s argument that what is needed here is a balance between protection of the family and respect for the autonomy of a deceased to do what he likes with his property after death. How much respect should be accorded to each of these objectives is primarily a matter of political debate, although it might be worth noting that anecdotally, in my discussions of these proposals with students since 2009, virtually-adult children usually support the right of parents to do what they want with their money – it is the parents I have discussed it with who are horrified by the idea of children being disinherited entirely just because they have “grown up”.
The consultation is open until Friday 18th September, for those of you looking for some way to occupy yourself during the long summer evenings. There is quite a lot of interest in the topic from my colleagues at Glasgow – I imagine we’ll be submitting a response (or maybe several).
Frankie McCarthy 