The law is often criticised for being stagnant and out of touch with modern day societal structures, and this is particularly so in the area of succession law, which remains largely based on laws introduced in 1964.
In an attempt to make the law of succession “up to date, fairer, clearer and more consistent”, the Scottish Government recently introduced the Succession (Scotland) Bill (the ‘Bill’) into the Scottish Parliament. It would be fair to say that the Bill follows a lengthy consultation process, the Scottish Law Commission having first examined succession law in 1986. The outcome of the consultation and items of reform not being taken forward has already been covered in a separate blog.
The Bill covers a number of technical aspects of the law of succession and has 27 sections (and a schedule). However, you will be glad to hear that this blog only seeks to summarise the most relevant (or, rather, interesting) sections of the Bill. So, what are they?
1 Effect of divorce, dissolution or annulment on a will
Under the existing law, a testamentary writing (a will or codicil) that makes provision for the spouse or civil partner (‘CP’) of the testator (the person making the will) is still valid following the breakdown of that relationship by divorce, dissolution or annulment. As you can imagine, this can lead to some unintended and undesirable outcomes if no steps are taken to update a will following the breakdown of a relationship.
However, under section 1 of the Bill, any provisions in favour of a former spouse/CP would be treated as having been revoked when the relationship came to an end, unless the testator stated otherwise in the will (let’s be honest though, the likelihood of that happening is fairly slim).
Similarly, if the former spouse/CP has been appointed as trustee, executor or guardian, these appointments would fall on divorce/dissolution of the civil partnership, subject to any provision to the contrary.
These changes will be welcomed by many, and they will bring Scotland more in line with the English position. However, this change in no way removes the need to consider your will during separation, divorce or dissolution of a civil partnership – particularly for those with a global lifestyle or career.
2 Effect of divorce, dissolution or annulment on a special destination
Special destinations, also known as ‘survivorship destinations’ are the bane of many solicitors’ professional lives. They most commonly appear where heritable property (i.e. land or buildings) is owned by two or more individuals (usually spouses). The destination provides that on the death of the first spouse, their title automatically passes to the survivor, notwithstanding the terms of any will. In essence, the special destination will supersede the terms of a will.
Like testamentary writings, special destinations currently continue to subsist following the breakdown of the relationship of the individuals. However, section 2 of the Bill proposes that a special destination of property in favour of a former spouse/CP will be revoked on divorce etc. This provision applies not only to heritable property but also to moveable property (i.e. bank accounts and investments etc) that are held in joint names (*breathe sigh of relief*).
However, this change will not affect contractual ‘survivorship destination’ arrangements, which are commonly found in investment management agreements.
3 Rectification of a will
In the Supreme Court case of Marley v Rawlings and Another, Mr and Mrs Rawlings signed mirror wills in 1999, leaving everything to each other on the first death and to Mr Marley on the second death. However, due to a “clerical error”, Mr Rawlings signed the will prepared for Mrs Rawlings, and vice versa.
The Supreme Court decided that Mr Rawlings’ will should be rectified and given effect to as though he had signed the correct will in the first instance. However, as this was an English case, there was uncertainty about what decision the Scottish Courts would reach in similar circumstances.
Section 3 of the Bill clarifies the position here, and enables the Court of Session/Sheriff Court to rectify a will, where the Court is satisfied that the will fails to accurately express the testator’s instructions, provided that the following conditions are also met:
- rectification is only available where someone other than the testator has prepared the will, but on the testator’s instructions (i.e. the will is drafted by a solicitor);
- the deceased must have been domiciled in Scotland at the date of death;
- any application to rectify a will must be made within six months from the date of confirmation, if applicable, or the date of death if confirmation is not obtained. Confirmation is the legal document issued by the Scottish courts in favour of the deceased’s executors; and
- there must be clear evidence to show that the will does not reflect the testator’s intentions, although the instructions don’t necessarily need to be in writing.
While one hopes that cases raised under this section will be few and far between (particularly where the will has been drafted by a solicitor), this change is welcomed insofar as it clarifies an area of the law that was previously shrouded in uncertainty. As noted here, the tax treatment of a rectified will could be interesting.
4 Revival of earlier revoked wills
Under the current law, an earlier will which is then revoked by a subsequent will, automatically revives if the later will is then revoked. However, under section 5 of the Bill, the earlier revoked will only be revived automatically if the testator either took proactive steps to re-execute it, or makes a new will on the same terms as the one which was revoked. Phew, that was one too many ‘Rs’ to grapple with.
5 Death of beneficiaries in a will before the testator
Section 6 of the Bill provides that, where a beneficiary of a legacy in a will (known as a ‘legatee’) dies between the will being made and receiving that legacy, the legatee’s issue (i.e. children, grandchildren, great-grandchildren and so on) would “step into the shoes” of the beneficiary and inherit the legacy in their place, unless the will expressly precludes this.
Currently, this rule applies to legacies bequeathed to the testator’s children and also nieces and nephews, but section 6 would see the rule restricted to the testator’s direct descendants.
6 Survivorship: common calamities
Section 9 of the Bill applies where two people die simultaneously, or where it is uncertain who survived whom.
The current rules of survivorship stipulate that where spouses/CPs die in a common calamity it is presumed that neither survived the other. In all other cases the younger is presumed to have survived the elder. However, section 9 replaces the two existing rules, and states that, where two people die in these circumstances, neither is to be treated as having survived the other.
Often, testamentary writings will make provision for an individual, conditional upon them surviving the testator for a specified period (most commonly 30 days). This will continue to be fully competent. However, if there is doubt about whether the individual survived the mandatory period, they are to be treated as having failed to survive the testator. In this scenario, the testator’s will would then be distributed in accordance with the ‘fall-back’ provisions (provided the will includes these).
7 Protection for trustees and executors
Section 18 of the Bill also provides executors and trustees with some additional protection where they have incorrectly distributed assets to the wrong beneficiary. Broadly speaking, it provides that an executor/trustee will not be personally liable in these circumstances, provided that:-
- the distribution is made in good faith; and
- the executor/trustee has made reasonable enquiries (or that the distribution was made in accordance with an order of Court).
What constitutes “reasonable enquiries” remains to seen, but if there is any doubt regarding the identity of the correct beneficiaries, it is suggested that the executor/trustee (or their solicitor) may want to instruct heir hunters to investigate the deceased’s family tree before making any distributions, particularly if the deceased died intestate (i.e. without a will).
8 What does the future hold?
While the Bill goes some way towards implementing the issues raised in the initial consultation on technical issues, it does not, for example, address the timescales for a surviving cohabitant to make a claim on the deceased’s cohabitant estate, where they die without a will.
In particular, the Scottish Law Commission recommended that the period within which the surviving cohabitant must apply to the court for financial provision from their deceased partner’s estate should be increased from six months to one year.
However, it is expected that this proposal will be picked up in the second consultation which will also consider the proposed new rules for the division of an estate where someone dies without a will, protection for children and spouses/CPs from disinheritance under a will, and extended rights for cohabitants on the death of their partner.
This Bill deals with technical issues. The next consultation will look at other matters, still technical as such, but which affect ‘policy’ issues. It will take longer for there to be a Bill on these topics, but we will keep you up to date on developments. Indeed, we will shortly blog on the extremely important topic of ‘legal rights’. We have blogged about ‘legal rights’ before and the new blog will look at what is on the agenda for reform in this area.
This blog was written by Nicola Neal- 0131 656 0176 or firstname.lastname@example.org
Should you wish to discuss any of the issues raised in the blog, please contact your usual Brodies’ contact or any of the following:-
Alan Barr – 0131 656 0103 or email@example.com
Susanne Beveridge – 0131 656 0218 or firstname.lastname@example.org
Mark Stewart – 01224 392 282 or email@example.com
Norman Kennedy – 0141 245 6265 or firstname.lastname@example.org
Alan Eccles – 0141 245 6255 or email@example.com
On June 29, 2015