Legal rights have been a feature of Scottish law for over 50 years. Legal rights apply whether you have made a Will (testate) or not (intestate). Legal rights act as a safeguard to protect members of a family from being disinherited.
Legal rights can be claimed by a surviving spouse, this also includes estranged or separated spouses unless there is a valid separation agreement in place. Civil partners and children (including adopted and illegitimate children and any issue of a child who has predeceased the deceased) also have legal rights on the estate. The right to claim is automatic, no application to the court is necessary.
The value of each person’s legal rights claim depends on which family members survive the deceased.
The legal rights are calculated net of debts and are only available on the moveable element of the estate. The moveable estate is defined as cash, bank/building society accounts, investments, saving certificates, premium bonds, life polices, motor vehicles, stamp collections etc. The debts such as payment of inheritance tax (if applicable), funeral costs, expenses to obtain confirmation of the executors, legal fees, conveyancing fees and the realisation of assets are all taken into consideration to calculate a legal rights claim. Heritable property is not included in the calculation for legal rights. (i.e. houses and land).
The law on this matter is clear. Even where, for example, the testator has made it clear that he does not wish a particular “black sheep” child to have any rights against his estate, the executors are obliged to advise all who might have a claim to legal rights of their entitlement. Whilst it is appreciated that this can be awkward for executors, their duties are clear. They are not obliged to encourage a claim to legal rights and similarly, they should not bring pressure on a particular individual not to claim. Having advised the relevant individuals of their entitlement to claim legal rights, the executors are required to make available to those individuals of their legal agents the information which is required to enable such potential claimants to decide whether or not to claim.
20 years. Where a potential claimant cannot be traced the executors may have no alternative but to retain on an interest bearing basis a sum to meet the potential claim of that missing beneficiary, notwithstanding the views of, or complaints on the part of, the other beneficiaries.
There is no obligation to claim legal rights. In fact, legal rights will normally be discharged where the benefit left to the potential claimant under the Will is greater than the value of the entitlement to claim legal rights. Similarly, in most stable family situations, children will decline their entitlement to claim legal rights if they perceive that this will prejudicially affect the financial position of the surviving parent. There may be very good reasons for claiming legal rights, for example the value of the legal rights claim may exceed that of the legacy. A claim may be a useful tax planning device. Alternatively, if you don’t claim your legal rights the assets may pass to an elderly relative and their inheritance may disappear in care in the community fees.
With careful planning, legal rights can be mitigated substantially. Should you wish to discuss this matter in more detail, please contact us at Stevenson Kennedy Limited.