Intestacy is the term used to describe how a person's estate will be divided on death when the person does not leave a valid will choosing their beneficiaries, or where their will does not dispose of their entire estate.
The intestacy rules in Scotland are contained in the Succession (Scotland) Act 1964 (the Act), and althoughit has been updated over the years - to include provisions for civil partners, for example - the legislation is now 56 years old and doesn't necessarily reflect today's society and family relationships.
The Act provides how the estate (all of the money, property and assets) of the deceased should be divided.
Succession rules where there is a surviving spouse or civil partner
It is a common misconception that when one member of a couple dies, the surviving spouse or partner will inherit their whole estate.
When a person dies and they are married or in a civil partnership at the time of their death, the intestacy rules provide for the estate to be divided into three parts:-
- prior rights of the surviving spouse or civil partner;
- legal rights; and
- the free estate.
Prior rights provide the survivor with three rights. Firstly, the survivor is entitled to a housing right up to a maximum value of £473,000. The survivor must be ordinarily resident in the property at the time of the death.
If the value of the property is less than £473,000, the value of this right is capped at the value of the property.
Secondly, the survivor is entitled to household contents, up to a maximum value of £29,000. Again, if the value of the household contents is less, the value of this right is capped at the value of the household contents.
Finally, the survivor is entitled to a cash right. The value of this cash right depends on whether the deceased was survived by children. If the deceased was not survived by children, the survivor will receive a cash right of £89,000.
If the deceased was survived by both the survivor and children, the survivor's cash right is reduced to £50,000.
Legal rights, which apply on intestacy as well as when a person leaves a will, provide for the surviving spouse or civil partner and children to receive a fixed share of the moveable estate. This includes all assets, except land and buildings.
The share depends on who survives the deceased. If survived by a spouse or civil partner, and children, the survivor receives a third and the children receive a third, with the children's third to be divided equally among them.
Where the deceased is survived by a spouse or civil partner only, they will receive one half. Where the deceased is survived by children only, they will receive one half, again, divided equally among them.
Succession rules where the estate is not exhausted by prior rights, or there is no surviving spouse or civil partner
The remainder of the estate (or all of the estate when there is no surviving spouse or civil partner), known as the free estate, is then divided in accordance with the terms of the Act in the following order:
- Children and adopted children (if a child of the benefactor dies before them, and is survived by their own children, their own children will take the share their parent would have been entitled to). If all children have predeceased, grandchildren will take the free estate. The rules provide that where descendants survive, they should inherit.
- Parents and siblings will share the free estate if the deceased is not survived by any descendants. The free estate is divided into two halves, with one half being divided between the deceased's parents, and the other half being divided among the deceased's siblings. For example, if the deceased is survived by both parents and three siblings, each parent would receive one quarter and each sibling would receive one sixth. If one parent has predeceased, the surviving parent inherits one half, and the other half is divided among the deceased's siblings. If a sibling has predeceased and leaves children surviving (nieces and nephews), they will take their parents share. If only parents survive, they take the whole estate. If only siblings survive, they take the whole estate. The rules provide for the descendants of the siblings to inherit the whole estate where parents and siblings do not survive the deceased. Notably, half-siblings only receive a share of the estate where there are no siblings who share both parents with the deceased, or descendants of those siblings.
- The surviving spouse or civil partner will inherit the free estate if the deceased is not survived by a relative under 1 or 2 above.
- If there are no surviving relatives under any of the classes listed above, the Act provides for ancestors to inherit the free estate, starting with aunts and uncles on both the maternal and the paternal sides. The rules provide for descendants of aunts and uncles to inherit if the aunts and uncles have predeceased.
- The Act goes on to provide that if there are no relatives under those classes, succession is open to grandparents, then great-uncles and aunts, then very remote ancestors (which would include great-grandparents or great-great grandparents).
- In the event that there are no surviving relatives whatsoever, the Crown will take the whole estate â€“ known as ultimus haeres.
Who doesn't benefit under the Act?
The Act doesn't make any provision for cohabitants or for step-children. Cohabitants can make a claim under the Family Law (Scotland) Act 2006, but this is not automatic and needs an application to the court.
The maximum the court can award is what the cohabitant would have received if the couple had been married or in a civil partnership. There is no provision for step-children and provisions for half siblings are very limited.
Possible changes ahead for Scotland's intestacy rules
The Scottish Government is looking at the intestacy rules and a further consultation was carried out in February 2019.
It seems likely that the rights of the surviving spouse or civil partner will be enhanced although what changes may be implemented to improve the position of cohabitants and stepchildren remain to be seen.
Families are becoming increasingly complex and designing a new regime for intestacy to reflect that is not an easy task.
However, making a will avoids the complications that arise with intestacy and provides control and certainty and lets each individual make the provisions that are right for them and their family.
This article originally appeared in the Gazette.