Dying without a will in Scotland: what happens to your estate?

It is estimated that over two-thirds of adults in Scotland do not have a will. This means they have no say in what is to happen to their estate when they die. When a person dies without a valid will, this is known as intestacy. In these cases, the law provides an order of distribution of assets, and specifies who is entitled to inherit.

The law governing this distribution dates back to 1964, and while there have been minor changes over the last six decades, there has been no significant review to the law. The law of intestacy does not reflect many modern families. Putting a will in place avoids this, and makes sure that assets are distributed according to an individual's wishes.

Prior rights for spouse or civil partner

The law sets out an order of priority for beneficiaries inheriting from an intestate estate. If the deceased had a spouse or civil partner, they will have 'prior rights', entitling them to the following:

• a right to the home they were ordinarily resident in (up to £473,000);
• a right to the home's contents (up to £29,000); and
• a financial payment (of up to £89,000 where the deceased was not survived by children, or otherwise up to £50,000).

Legal rights

If the estate has not been exhausted by this point, the law next provides for 'legal rights', which are determined depending on the make-up of the family:

• If there is both a surviving spouse or civil partner and children, each are entitled to one-third of the individuals moveable estate.
• If there is only a surviving spouse or civil partner or children (but not both), the surviving spouse or civil partner or children will be entitled to one-half of the moveable estate.

The Free Estate

The free estate is made up of everything remaining in the deceased's estate after the above-mentioned rights are distributed. The free estate is distributed in the following order: -

1. Children;
2. Surviving spouse or civil partner;
3. Parents and siblings with parents receiving one half between them and siblings receiving the other half between them;
4. If parents have predeceased, siblings alone;
5. If siblings have predeceased or there are none, parents alone;
6. Aunts and uncles;
7. Grandparents;
8. Siblings of grandparents; and
9. More distant ancestors.
10. If distant relatives cannot be located, the estate ultimately will be given to the Crown.

For example, if the deceased is survived by their three children, each child receives 1/3 of the estate. If any child predeceased their parent but was survived by their own children, their children would receive their parent’s share equally among them. Within each group, the children of any predeceasing beneficiary will inherit. Grandchildren or great grandchildren would inherit before the surviving spouse, and nieces or nephews, or great nieces and great nephews will inherit before aunts and uncles.

Position for cohabiting couples

However, these rights do not apply to cohabiting couples. If two people are living together as if they are a married couple or civil partners, but without being legally married or in a civil partnership, they do not automatically get a share of their partner's intestate estate. Instead, they must make a claim in court against their partner's estate within 6 months of the death. This timescale is to be extended to 12 months by legislation but this is not yet in effect.

The court has wide discretion in deciding what, if anything, a cohabitant is to receive from their partner's estate. The court considers factors like the size and nature of the deceased's estate, other claims against the estate and "any other matter the court considers appropriate". The court will also consider any amounts that may have passed by survivorship or any pension benefits. The court cannot award the cohabitant more than what a spouse or civil partner would receive on intestacy, but it can award less. The court will also consider any amounts that may have passed by survivorship or any pension benefits. Going to court can often be expensive and stressful. Matters become more complicated if the deceased had children under 16 with their cohabitating partner as this creates conflicts of interests between those parties which must be carefully managed.

Having a will in place avoids this uncertainty. This lets individuals reflect their family circumstances in their will and ensure their estate is distributed according to their wishes.

Inheritance tax

Lastly, by having a will, this provides the opportunity for an individual's wishes to be implemented in a tax-efficient way. This may be through gifting assets prior to death, leaving money to charities, trust planning and taking advantage of inheritance tax allowances. Instead, intestacy means the deceased's estate will be subject to a larger inheritance tax bill that may otherwise have been reduced through planning.

Additionally, spouses benefit from spousal relief and transferable allowances for inheritance tax purposes – cohabitants do not. To allow cohabitants to make the most of their inheritance tax bands, a trust will is necessary as a tool to mitigate inheritance tax.

Overall, not having a will means an individual will have no control over what happens to their estate upon their death. This may not reflect their wishes and could exclude individuals they would want to benefit, such as a cohabitant. A will provides certainty to both spouses and cohabitants and allows an individual to leave gifts to charity or family members who otherwise would not benefit under intestacy.

It is also more costly to have no will. If an individual dies without a will, there are additional steps required to deal with their estate, which includes applying to the court for the appointment of an executor and payment for a bond of caution. These additional expenses can be avoided by having a will.

Therefore, while the law provides rules to deal with intestacy, nothing can replace the clarity of having a will. If you would like to put a will in place, get in touch with one of our wills and estate planning experts.