“But I’ve not spoken to my children in 10 years!” Whether or not you choose to make a Will, there exists what are known as “Legal Rights” in Scotland. Some argue that if they have chosen to make a Will and expressed a clear wish that their children are not to inherit any of their estate, then why should their children, who they, perhaps, have not seen nor spoken to for many years, be able to lay any claim against their estate? The theory behind these rights is, in fact, in order to protect against disinheriting your children or, indeed, your spouse.
The basic rules
The current rules are that a surviving spouse or civil partner is entitled to one-third of a deceased person’s net moveable estate if the deceased left a child/children or to one-half of it if the deceased left no children. Equally, the children are collectively entitled to one-third of a deceased person’s net moveable estate if the deceased left a spouse or civil partner or to one-half if the deceased left no spouse or civil partner. Legal Rights cannot be claimed against your heritable property. They only subsist in relation to your moveable estate and, in particular, your net moveable estate. Moveable estate would include cash in the bank, investments, motor car etc. Your net moveable estate is the amount left over after deduction of any Inheritance Tax payable, funeral costs etc. The calculations can be complex and advice should be sought.
Legal Rights are an entitlement and if not dealt with as part of the estate administration subsist for 20 years – a long time for uncertainty. Any executor, not just a solicitor, attending to the administration of a deceased person’s estate where it was known that the deceased had or was highly likely to have had any children, would be required to take all reasonable steps to trace them and make them aware of their entitlement and the value of their Legal Rights and should either deal with the payments required or obtain renunciations if the child/children do not wish to claim. All children, whether provided for in the Will or not are entitled to be provided with a Legal Rights calculation, noting the overall moveable estate value, together with any relevant deductions made. The child or children are also entitled to seek their own independent legal advice in relation to the Legal Rights calculation and the proposed amount to be made payable to them. It is not necessary for all the children to claim their Legal Rights. For instance, if there are three children and only one wishes to claim their Legal Rights, this is perfectly valid.
Where the deceased had a child or children who predeceased, then the next generation are entitled to claim the Legal Rights their parent would have had. This is often forgotten, causing difficulties for all and potential claims against the executors of the deceased.
Anyone with business interests as a sole trader or in a partnership or company should review the impact of a Legal Rights claim on their business. There are many other issues that can arise – if in doubt you can consult us.
If Legal Rights need to be paid out, this will reduce the value of the estate left for the intended beneficiaries and can result in family conflict. Assets may require to be sold in order to fulfil any Legal Rights claims. However, with careful planning, you can possibly make provision for your estate to pass to whom you intend.
Should you wish to discuss your circumstances and the importance of having a Will in place, please do not hesitate to contact our Private Client team, who would be happy to assist.