The First Minister’s first Programme for Government
- The First Minister’s announcement of the included, in particular (emphases added):
“We also plan to consult in the coming year on further legislation on Succession which will aim to radically overhaul the current law in this area. As part of this modernisation the distinction between movable [i.e. in broad terms everything apart from houses and land] and immovable property [i.e. in broad terms, houses and land] would be removed to give children, spouses and civil partners appropriate legal rights over both forms of property.”
- Before going on to make some comments about some of the “spin” that has been put on that pronouncement in the Press it is worth outlining what the “legal rights” referred to actually are.
- In this note references to a “surviving spouse” include a civil partner.
Entitlement on death to “legal rights” – surviving spouse and children
- It is a distinctive feature of Scots law that, on death, no matter what the deceased’s Will may say a person’s surviving spouse and children have automatic entitlements to a cash sum from the deceased’s estate. These entitlements are called “legal rights”.
- A person may either choose to accept his or her benefits (if any) under the will or claim their “legal rights”: they cannot take both. Accordingly, “legal rights” function as a form of protection against disinheritance.
- As the law stands, the surviving spouse is entitled to a sum of money equivalent to one-third of the deceased’s “net movable estate” if there are surviving children and one-half if there are no surviving children.
- Broadly speaking, the “net movable estate” means the value of all property to which the deceased was entitled at death – except for any house(s) and land – less the deceased’s relative debts.
- Correspondingly, the children are entitled, equally amongst them, to a sum of money equivalent to one-third of the deceased’s “net movable estate” where there is a surviving spouse, and one-half where there is not.
- For present purposes, one of the key points to note about the current law is that these “legal rights” are only due in relation to “movable” property. Houses and land (“immovable” property) do not come into the equation. It is this aspect of the matter on which the First Minister’s announcement focuses.
Explosive response in the press
- Although, at face value, the First Minister’s announcement might not strike one as ground-breaking some of the Press comment has been heated. For example, the Sunday Herald on 30th November:
“The succession law reform remains the explosive idea. As things stand, the rights of close relatives extend only to movable property, not [immovable]. A disgruntled family member can argue over cash in the bank, in other words, but not the deceased’s decisions regarding the house or the acreage. By such means have the big estates held together for generations. Make all children equal, however, and the gigantic holdings begin to fall apart.”
- And the Telegraph on 30th November:
“Family farms face being broken up and put out of business thanks to unintended consequences of the SNP’s land reform agenda against Scotland’s estates …”
- The newspapers’ spin makes the First Minister’s announcement sound as though it came out of the blue as a radical (near revolutionary) innovation. But, in fact, the Scottish Law Commission has been making recommendations to this effect since at least 1986.
The Scottish Law Commission (“the SLC”) and the review of “legal rights”
- In 1986 the SLC published a Consultative document which included an evaluation of “legal rights” in which they said:
“One of the main criticisms of the existing law is that “legal rights” are exigible only out of movable property … we can see no good reason for restricting the legal right to movable property.”
- In 1990 the SLC published a Report on Succession in which they referred to their 1986 Consultative document and the responses they had received to the idea that “legal rights” should be payable out of both movable and immovable property:
“This was supported by almost all of those who commented on it [but] the Scottish Landowners’ Federation … made strong representations to the effect that there was a very grave disadvantage in [allowing “legal rights” to be payable in respect of] farms and landed estates to children and spouses … They pointed out that many landowners wish to leave their estates to one child … The National Famers’ Union of Scotland made similar representations … We do not believe however that the answer to their concerns is to retain the distinction between [immovable and movable property for the purposes of “legal rights”].
- That being the stance of the SLC on the matter was again reflected in the SLC’s 2007 Discussion Paper on Succession and their 2009 Report on Succession. That latter fact (at least) is reflected in the Scottish Government’s “Consultation on the Future of Land Reform in Scotland” just published (on 2nd December) which says:
The Land Reform Review Group highlighted a number of concerns over the current distinction in succession law between movable and [immovable] property. The removal of the distinction was fundamental to the recommendations set out in the Scottish Law Commission’s 2009 Report on Succession, to ensure a just distribution of assets among a deceased’s close family to reflect both societal change and expectations … a consultation on the substantive changes to succession law will be issued in 2015 … As part of this modernising of succession law, the distinction between movable and immovable property would be removed.”
The SLC proposal in (very broad) context
- The SLC’s proposals are considerably wider than simply removing the distinction between movable and immovable property for “legal rights” purposes. They propose abolishing the traditional concept of “legal rights” altogether and replacing it with a scheme directed towards the same end (i.e. protection from disinheritance) but calculated on an altogether different basis.
- This is not the place to summarise the recommendations but it is as well to mention that they are in the offing and will form part of the Scottish Government’s forthcoming consultation.
- Leaving aside the question as to whether removing the distinction between movable and immovable property for “legal rights” purposes would have the effect that the Scottish Landowners’ Federation and National Farmers’ Union for Scotland suggest, it does seem that the description in the Press of the proposal as being “explosive” is somewhat overblown.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact David Ballantine: email@example.com