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Scottish Law - children's inheritance rights

including wills and probate
swill453
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Scottish Law - children's inheritance rights

#441339

Postby swill453 » September 10th, 2021, 7:06 pm

In Scotland it isn't possible to disinherit children. If the deceased has a spouse, then the children collectively have legal right to one third of the "moveable estate".

Moveable estate is basically everything other than property or land.

Does anyone know if this would include money/shares in joint accounts held between the deceased and their spouse?

Scott.

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Re: Scottish Law - children's inheritance rights

#441343

Postby genou » September 10th, 2021, 7:13 pm

swill453 wrote:In Scotland it isn't possible to disinherit children. If the deceased has a spouse, then the children collectively have legal right to one third of the "moveable estate".

Moveable estate is basically everything other than property or land.

Does anyone know if this would include money/shares in joint accounts held between the deceased and their spouse?

Scott.


It depends. The default is that 50% of the joint asset is in the deceased's estate. If there is clear evidence that all the funds were provided by one or other of the holders, the asset follows that reality - this is often referred to as an administrative joint account ( I had one with my mother, all the money being hers ).

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Re: Scottish Law - children's inheritance rights

#441346

Postby Lootman » September 10th, 2021, 7:39 pm

genou wrote:It depends. The default is that 50% of the joint asset is in the deceased's estate.

Is that a peculiarly Scottish thing?

I ask because it has always been my understanding, in England and Wales, that would only be true for an asset held as tenants in common. If instead it were held as a joint tenancy then 100% of that asset is outside of probate and outside of an estate. Effectively a trust structure is set up under the covers whenever an asset is acquired as a joint tenancy. And upon the first death of a tenant the balance of the asset or account passes automatically and instantly to the surviving tenant.

The value of that transfer can still count towards computing any IHT liability if the surviving tenant is not a spouse. But no probate would be required for the transfer, which is a key benefit of owning assets as joint tenants. In fact if all your assets are held as joint tenants with your beneficiary then the contents of your Will become almost irrelevant. So how could it be challenged by a disinherited child?

Regarding Scott's question about disinheriting one's children in Scotland, wouldn't a simple way around that be to gift assets to your chosen beneficiary whilst you are still alive?

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Re: Scottish Law - children's inheritance rights

#441349

Postby Dod101 » September 10th, 2021, 7:48 pm

In Scotland where I live and am domiciled, joint anything is deemed to be owned 50/50 so I think the answer to swill's question is just that. 50/50 between the deceased and spouse, certainly absent any other evidence.. We do not have the concept of tenants in common or a joint tenancy so there is no question of the asset automatically passing to the survivor, meaning of course that you need to be careful with a family home in joint names. Half of it could go off somewhere else altogether.

Dod

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Re: Scottish Law - children's inheritance rights

#441357

Postby swill453 » September 10th, 2021, 8:15 pm

Lootman wrote:Regarding Scott's question about disinheriting one's children in Scotland, wouldn't a simple way around that be to gift assets to your chosen beneficiary whilst you are still alive?

To be clear, this isn't an attempt to disinherit children. I'm trying to understand what they're entitled under law, so I can adjust other measures (pension fund instructions) to suit.

Scott.

swill453
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Re: Scottish Law - children's inheritance rights

#441358

Postby swill453 » September 10th, 2021, 8:17 pm

Dod101 wrote:In Scotland where I live and am domiciled, joint anything is deemed to be owned 50/50 so I think the answer to swill's question is just that. 50/50 between the deceased and spouse, certainly absent any other evidence.. We do not have the concept of tenants in common or a joint tenancy

Are you sure about that? I thought we did, they just used different legal terms.

Scott.

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Re: Scottish Law - children's inheritance rights

#441363

Postby Dod101 » September 10th, 2021, 9:02 pm

Well I am not certain. It is some time since I made a Will but I am fairly sure that these concepts do not apply. My late wife and I held my current house jointly and I was told at the time that each of us owns 50% and we can do what we like with that. As it was, in our Wills we left our half to the other. I think you can add a survivorship clause on the Land Registry but I was advised against that. I cannot remember why.

Anyhow as it was in my late wife's Will I got my house back! I think though that joint bank accounts are held to be owned as to 50% each.

Dod

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Re: Scottish Law - children's inheritance rights

#441364

Postby Lootman » September 10th, 2021, 9:11 pm

Dod101 wrote:Well I am not certain. It is some time since I made a Will but I am fairly sure that these concepts do not apply. My late wife and I held my current house jointly and I was told at the time that each of us owns 50% and we can do what we like with that. As it was, in our Wills we left our half to the other. I think you can add a survivorship clause on the Land Registry but I was advised against that. I cannot remember why.

Anyhow as it was in my late wife's Will I got my house back! I think though that joint bank accounts are held to be owned as to 50% each.

I am a bit surprised if the concept of tenants in common ownership does not exist in Scotland, even if called something else. Another advantage of it is that it allows for unequal shares.

So if you own something as a joint tenancy then the shares have to be equal. So 50% each for 2 people, one third each if there are 3 people, 25% each for 4 people and so on.

If you want to set up ownership in unequal shares then you have to use a TIC structure and then specify the ownership percentages of each tenant. Again, in England and Wales. How would you achieve that in Scotland?

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Re: Scottish Law - children's inheritance rights

#441370

Postby Dod101 » September 10th, 2021, 9:34 pm

Lootman wrote:
Dod101 wrote:Well I am not certain. It is some time since I made a Will but I am fairly sure that these concepts do not apply. My late wife and I held my current house jointly and I was told at the time that each of us owns 50% and we can do what we like with that. As it was, in our Wills we left our half to the other. I think you can add a survivorship clause on the Land Registry but I was advised against that. I cannot remember why.

Anyhow as it was in my late wife's Will I got my house back! I think though that joint bank accounts are held to be owned as to 50% each.

I am a bit surprised if the concept of tenants in common ownership does not exist in Scotland, even if called something else. Another advantage of it is that it allows for unequal shares.

So if you own something as a joint tenancy then the shares have to be equal. So 50% each for 2 people, one third each if there are 3 people, 25% each for 4 people and so on.

If you want to set up ownership in unequal shares then you have to use a TIC structure and then specify the ownership percentages of each tenant. Again, in England and Wales. How would you achieve that in Scotland?


I do not know and I do not think that we have a Scottish lawyer around. If I remember I can ask my solicitor next week since I have an appointment to update myself on the current rules ro IHT etc and up date my Will.

Someone may have an answer but I have learned not to be pedantic on these matters!

Dod

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Re: Scottish Law - children's inheritance rights

#441375

Postby Dod101 » September 10th, 2021, 10:03 pm

Nor dogmatic which is probably the better expression.

Dod

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Re: Scottish Law - children's inheritance rights

#441383

Postby swill453 » September 10th, 2021, 10:53 pm

Dod101 wrote:Well I am not certain. It is some time since I made a Will but I am fairly sure that these concepts do not apply. My late wife and I held my current house jointly and I was told at the time that each of us owns 50% and we can do what we like with that. As it was, in our Wills we left our half to the other. I think you can add a survivorship clause on the Land Registry but I was advised against that. I cannot remember why.

This article https://www.rocketlawyer.com/gb/en/quic ... n-scotland indicates that the concepts of joint tenants vs. tenants in common apply in Scotland pretty much the same as England, they just use different terms such as survivorship clause as you mention.

To get back to my original question, which was about money and shares rather than property...

Obviously the mechanics of a joint account work the same in Scotland as in England. If I die, then my wife will have automatic access to money in joint accounts we shared. My question is whether "my" portion of it, presumably 50% in the absence of any other documented allocation, will count as part of my movable estate as far as childrens' inheritance rights are concerned.

The first response in the thread from genou indicated this would be the case, I'd appreciate a reference if anyone had one.

Scott.

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Re: Scottish Law - children's inheritance rights

#441412

Postby genou » September 11th, 2021, 9:52 am

swill453 wrote:The first response in the thread from genou indicated this would be the case, I'd appreciate a reference if anyone had one.

Scott.


Go here https://assets.publishing.service.gov.u ... _2006_.pdf

And search the document for "Jointly held moveable property"

It's HMRC rather than legal, but its decently authoritative.

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Re: Scottish Law - children's inheritance rights

#441419

Postby swill453 » September 11th, 2021, 10:19 am

genou wrote:Go here https://assets.publishing.service.gov.u ... _2006_.pdf

And search the document for "Jointly held moveable property"

It's HMRC rather than legal, but its decently authoritative.

Thanks for that, this makes it clear that a share of jointly held non-property is included in the "moveable estate" for calculation of "legitim fund" (the part of the state due to children as of right).

Interesting to note it's the responsibility of the executor to ensure the children get their share, even if the will is written leaving the entire estate to the spouse, for example.

(Unless the children renounce their rights, of course.)

Scott.

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Re: Scottish Law - children's inheritance rights

#441484

Postby genou » September 11th, 2021, 3:52 pm

swill453 wrote:
(Unless the children renounce their rights, of course.)

Scott.


There was a proposal in 2015 to abolish the distinction moveable/ heritable property, which would have rendered a will otiose in Scotland. It came to nothing in the end.

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Re: Scottish Law - children's inheritance rights

#441488

Postby Dod101 » September 11th, 2021, 4:19 pm

swill453 wrote:
genou wrote:Go here https://assets.publishing.service.gov.u ... _2006_.pdf

And search the document for "Jointly held moveable property"

It's HMRC rather than legal, but its decently authoritative.

Thanks for that, this makes it clear that a share of jointly held non-property is included in the "moveable estate" for calculation of "legitim fund" (the part of the state due to children as of right).

Interesting to note it's the responsibility of the executor to ensure the children get their share, even if the will is written leaving the entire estate to the spouse, for example.

(Unless the children renounce their rights, of course.)

Scott.


Well I can tell you about that. Irrespective of what the Will says, it is the responsibility of the Executors to advise the children of their legal rights (and of course the surviving spouse). They have 20 years would you believe to decide whether they will exercise them (but few I imagine would take that time) They cannot have their legal rights and any amount left by the Will so if they accept any legacy in the Will they are foregoing their legal rights (and vice versa of course) but to protect themselves the executors need to advise the children (and the spouse). It is not quite right to say that it is the responsibility of the executor to ensure the children get their share, even if the Will is written leaving the entire estate to the spouse. That is the whole point of advising the children of their legal rights; the children can renounce their rights if they wish, leaving the Will to stand as written.

As to the earlier point re jointly held moveable property, the only question then is whether it is held as to 50/50 or not.

Neither do I think that genou is correct. The proposal as I understand it, and I do not know whether it has been abandoned or not, would not make a Will otiose in Scotland; it was proposed to restrict legal rights to those children who could prove dependency and legal rights would otherwise not apply. I do not have an update, but it was still being considered the last I heard. I have never heard of any proposal to make a Will otiose in Scotland. That would be a far reaching reform, if indeed that is the right word. (A Will serving no practical purpose? I don't think so)

Dod

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Re: Scottish Law - children's inheritance rights

#441496

Postby genou » September 11th, 2021, 5:09 pm

Dod101 wrote:Neither do I think that genou is correct. The proposal as I understand it, and I do not know whether it has been abandoned or not, would not make a Will otiose in Scotland; it was proposed to restrict legal rights to those children who could prove dependency and legal rights would otherwise not apply.


That was one option, but it was not the only one. The other would have covered non-dependent children.* The reference amount ( i.e the amount that would have been covered by legal rights ) , was 300k in 2015 money. I don't have a handle on the median size of estate in Scotland, but I'd gamble that if I had said it would make a will otiose for the masses in Scotland, I'd not be far off, but I accept I was exaggerating, particularly for the demographic of TLF.

Dod101 wrote:I do not have an update, but it was still being considered the last I heard.
Dod


Definitely binned. There's a later attempt, purely aimed at intestacy : https://digitalpublications.parliament. ... n-Scotland

* it's all water under the bridge, but here it is https://www.webarchive.org.uk/wayback/a ... /downloads

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Re: Scottish Law - children's inheritance rights

#441497

Postby 9873210 » September 11th, 2021, 5:43 pm

I can't speak directly to the Scottish proposals, but in most places with forced inheritance it only applies to a portion of an estate. So the will is not otiose. And a will may do things other than distribute assets. (e.g. guardians or trusts)

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Re: Scottish Law - children's inheritance rights

#441500

Postby Dod101 » September 11th, 2021, 6:25 pm

Since I retired 25 years ago I have for various reasons had to update my Will several times and, as it happens, I am seeing my solicitor on Friday of next week to update myself on matters and make one or two changes to my Will so I will certainly want to speak about legal rights.

Throwaway comments such as from genou about Wills being otiose are not in the least helpful. For many/(most?) people they are very important otherwise we would not have the concerted attempts to get people to make a Will. He/she has I think more or less acknowledged that. That is the problem with this sort of site; sometimes people write as from authority whilst exaggerating or placing a nuance where it is unjustified and yet people take it as gospel. Not criticising genou in particular but I think readers need to understand what is being said.

I do not want to sound like you know who so will stop there.

Dod

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Re: Scottish Law - children's inheritance rights

#441505

Postby Dod101 » September 11th, 2021, 7:30 pm

9873210 wrote:I can't speak directly to the Scottish proposals, but in most places with forced inheritance it only applies to a portion of an estate. So the will is not otiose. And a will may do things other than distribute assets. (e.g. guardians or trusts)


It is not otiose anyway because apart from the assets which are not covered by the legal rights, property (which is known as heritable in Scotland) there is still the one third of moveable assets which fall to be distributed by the Will. A Will is sensible for all estates unless the assets are so trivial as not to matter, and of course, as 9873210 has mentioned there are other things to worry about.

Dod

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Re: Scottish Law - children's inheritance rights

#443062

Postby Dod101 » September 17th, 2021, 3:47 pm

genou wrote:
Dod101 wrote:Neither do I think that genou is correct. The proposal as I understand it, and I do not know whether it has been abandoned or not, would not make a Will otiose in Scotland; it was proposed to restrict legal rights to those children who could prove dependency and legal rights would otherwise not apply.


That was one option, but it was not the only one. The other would have covered non-dependent children.* The reference amount ( i.e the amount that would have been covered by legal rights ) , was 300k in 2015 money. I don't have a handle on the median size of estate in Scotland, but I'd gamble that if I had said it would make a will otiose for the masses in Scotland, I'd not be far off, but I accept I was exaggerating, particularly for the demographic of TLF.

Dod101 wrote:I do not have an update, but it was still being considered the last I heard.
Dod


Definitely binned. There's a later attempt, purely aimed at intestacy : https://digitalpublications.parliament. ... n-Scotland

* it's all water under the bridge, but here it is https://www.webarchive.org.uk/wayback/a ... /downloads


As I said, I saw my Scottish solicitor this morning. I of course asked her about the revised proposals re legal rights. She tells me that they have not been officially abandoned but are now on the 'too difficult' pile and of course like everything else they have been set back by COVID. She gave me the impression that she thinks it unlikely that they will go anywhere. So it seems they may not be definitely binned but rather, they are in limbo.

Dod


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