Under the current law the spouse (or civil partner) and children of a deceased person can make a claim on the estate if they have been excluded from the deceased’s Will or are dissatisfied with the legacy that they have been left. This is known as a “legal right” - a quirk of Scots Law designed to stop certain family members being completely disinherited. This claim extends to a one-third share of the deceased’s “moveable” estate where there is a spouse and children or a one-half share where there is either a spouse or children. If there is more than one child they would share either the one-third or one-half among or between them. No court application is required to claim legal rights: all that is needed is for the child to be the biological or adopted child of the deceased. There is no requirement to show any kind of close familial relationship between parent and child and, indeed, decades of estrangement do not have any effect on a claim whatsoever.
Importantly, legal rights is only a claim on the “moveable” part of a deceased’s estate. This can include cash, investments, jewellery, cars and really covers everything which is not land or buildings (being “immoveable” or “heritable” estate). This means that while a “black sheep” child can claim on his parent’s bank account he cannot claim a share of the family home or any land owned by the deceased. Currently if farmland is owned by an individual it will be excluded from a legal rights claim. The important trap to remember is that if the land is owned by a partnership then an interest in a partnership (and therefore the land) is treated as a moveable asset and thus is vulnerable to a legal rights claim. A similar situation could arise in a family run business set up as a limited company. If the company owns a shop, stock, goodwill etc. and the shares are held by an individual then the value of this shareholding (as a “moveable” asset) would be included in any legal rights calculation. Therefore, it is very important to check how the title to land is owned and by whom to ensure that it would be excluded from a legal rights claim.
However, the Scottish Government is currently consulting on proposed changes to this established regime based on the Scottish Law Commission’s 2009 Report on Succession. The recommendations propose that, instead of legal rights, there will be a “legal share” which again can be claimed by the spouse (or civil partner) or children of the deceased. The spouse would be able to claim a 25% share of what he would have inherited had the deceased died without a Will (“on intestacy”) and this claim will be against the whole estate - both heritable and moveable. In addition the children collectively could claim a legal share of 25% of what they would have inherited on intestacy. Again this 25% share is taken across the deceased’s heritable and moveable estate.
The removal of the heritable and moveable distinction could have far reaching implications for small businesses where the retail or workshop premises are owned by the sole trader or a partner or director as an individual. Whereas currently the value of the property (as a heritable asset) would fall outside a legal rights claim it would be taken into account in the new calculation. Parties with an interest in this issue are advised to formally submit their response to the Consultation before the closing date on Friday 18 September 2015 (http://www.gov.scot/Resource/0048/00480484.pdf).