Question 4
What are Legal Rights?
Legal Rights are a distinctive feature of Scots law and apply whether an individual dies having made a Will (testate) or not (intestate). The intention is to prevent members of a family from being disinherited by a disenchanted spouse and/or parent and as such they are impossible to defeat in a Will. This guide is intended to set out the most important points concerning Legal Rights and so help minimise the confusion and problems that can arise in families on this important issue.
Who Can Claim?
Legal Rights can be claimed by a deceased’s surviving spouse and by any of his or her children. The right to claim is automatic and a claim can be made at any time in the 20 years following upon the deceased’s death.
How Much Can Be Claimed?
The Legal Right of a surviving spouse is to a one-third share of the moveable estate if there are surviving children, and to a one-half share if there are no surviving children. In the same way, the children are entitled to a one-third or one-half share among them, depending upon whether there is a surviving spouse. If any child has died before the parent, leaving children of his or her own, the grandchildren can claim the share that their parent could have claimed had he or she survived.
Net Moveable Estate
Legal Rights can be claimed from the deceased’s moveable estate only e.g. bank and building society accounts, shareholdings in listed and/or family companies, life policy proceeds, National Savings products etc. The family home and other land held by the deceased (i.e. – heritable property), is not subject to a claim for Legal Rights. The value of the various moveable assets is the value given to them at the date of death. Before working out the extent of the claims, the total moveable estate is reduced by all of the deceased’s debts which are of a moveable nature and by all of the funeral expenses and, if applicable, the part of any Inheritance Tax liability which relates to the moveable estate. A share of the expenses resulting from the winding-up of the estate is also taken off.
Interest is payable on any sum claimed, from the date of death until payment. The rate of interest is not set in advance but is taken to be what the sum claimed actually earned or what it could have earned if it had been managed carefully.
What If The Deceased Left A Will?
If a deceased person has made a Will that leaves out the surviving spouse and/or the children, the excluded person or people can still make a claim for Legal Rights. It is important to realise, however, that even where bequests to the surviving spouse and/or children have been made in the Will, this does not prevent claims for Legal Rights being made. In these circumstances a widow and/or child may choose to claim Legal Rights instead of accepting the bequest, especially if such a claim would mean the person claiming could get a larger inheritance than they would if they simply accepted the Will terms. It is not possible, though, to take the bequest in terms of the Will and claim Legal Rights as well.
Tax Planning
There are sometimes good tax-planning reasons for advising a surviving spouse, or more usually the children, to claim their Legal Rights in a deceased’s estate. This much depends on the precise financial and other circumstances surrounding the family and it is not possible to decide in advance when this will be suitable.
Legal Rights can often cause problems in a family if they are not handled properly. Should you have any questions please do not hesitate to contact Frank Fletcher, Tom Monteith or Pamela Niven or your usual Bird Semple contact.
