Wills, Wealth and Who Gets What: A fight to modernise Scotland's succession law

Zia Akhtar explores the legal rights of forced heirship and movable and immovable property in Scots Law.

Introduction

The question of whether a will sealed in Scotland is valid has two components: formal and essential validity. In relation to the former, testamentary provision will be recognised where the terms of the Wills Act 1963 are met. Scots law provides the framework for such a gift to be made in the testamentary disposition of the testator under the Solicitors (Scotland) (Drafting Wills) Practice Rules 2010. The issue is the equitable distribution upon death from the lack of application of legal rights to movable property.

There are more than 60% of people in the UK who do not have a will to distribute their after their death. (Over two thirds of Scots lack up to  date will. Scottish Legal news. 3/9/24https://www.scottishlegal.com/articles/over-two-thirds-of-scottish-adults-lack-up-to-date-will)  The  essential validity, and the capacity to make the will is governed by the law of the domicile. This needs consideration of two elements: the forced heirship rules and the rights that can be claimed in court under the Scottish legal rights and testamentary freedoms. This is an area of entitlement that is a form of ‘forced heirship’ that applies in Scotland to prevent testators disinheriting certain parties from their estate.  

The rights of inheritance are more than a century old and there is insufficient contemporary authority “to provide practitioners with guidance”. (Sarah-Jane MacDonald, A Practical Guide to Legal Rights in Scotland, Law Brief Publishing, February 2022https://www.lawbriefpublishing.com/2022/02/free-chapter-from-a-practical-guide-to-legal-rights-in-scotland-by-sarah-jane-macdonald/) This implies that any calculation of legal rights for a stipulated heir “only applies to the estate left after prior rights have been deducted and it will not take into account any sums due to be paid from the estate in respect of prior rights”.

The expert view is that the legal rights have pre-dated most modern law, with the origin dating back to Roman law, among others. This implies that they blend both common law and civil law, and that they should be applicable in family and trust law disputes that come to the courts in multi-jurisdictional and trans-jurisdictional parties where questions of domicile arise. The solution for the uniformity of Scottish wills intended in terms of the “the solution to formalism is, more or less, the abandonment of form”.  (Kenneth Reid, Testamentary Formalities in Scotland, University of Edinburgh Law School Working Paper No. 2010/33, November 2010)

If the person dies intestate, their assets will be distributed according to the Succession (Scotland) Act 1964 that governs the distribution of estates under intestacy. If the deceased who was domiciled in Scotland died testate, then the legal rights should always be respected as in the will, but if the deceased died intestate, these will only be effective if prior rights have not exhausted the estate. Under Section 10(2):

“The amount of any claim to [legal rights] out of an estate shall be calculated by reference to so much of the net moveable estate as remains after the satisfaction of any claims thereon under the two last foregoing sections [ie prior rights].”

1) Rule of domicile

In Scots law, the legal rights in testamentary dispositions are effective when someone dies while domiciled in Scotland at the date of death; whether testate (with a will) or intestate (without a will), forced heirship rules will apply to their estate (money, property and possessions). The legal rights only apply where the deceased was domiciled in Scotland. In Scots law, a will may not be valid where it is written for a non-UK domiciled individual – and when there is more than one jurisdiction involved, each has to decide whether to apply its own laws to the succession or the laws of the deceased’s domicile.

The foreign heirs to property can live in Scotland for many years, indeed decades, without becoming UK domiciled for succession purposes. In both Cyganik v Agulian [2006] EWCA Civ 129 and Holliday v Musa [2010] EWCA Civ 335 the cases related to claims under the Inheritance (Family and Dependants) Act 1975, and both claims failed because the deceased had not acquired a domicile of choice in the UK. The court has no jurisdiction to hear a 1975 Act claim against the estate of a foreign domiciled person. These cases establish the principle that the Scots law of succession may not be entirely valid where it is written for a non-UK domiciled individual.

In Scotland, legal rights “can be claimed by the deceased’s surviving spouse or civil partner and the children of the deceased; are claimed from the deceased’s worldwide ‘moveable estate’ (ie not property or land) after all moveable debts have been deducted; are automatic, so you won’t need to make an application to the court; and are considered a debt on the deceased’s estate in relation to beneficiaries (the person(s) inheriting assets from the estate) and will take priority over any legacies, included in the deceased’s will”. (‘What are your legal rights in Scotland for inheritance?’ The Gazette: Official Public Record, December 2020.)

The rights of inheritance cannot be invoked if the person decide whether to accept their provision under the will and cannot both rights under the testament and the legal rights to any property gifted in the will. The legal rights can only be claimed against the movable estate of the deceased – ie the liquid entitlements – and the heritable property is not included in the calculation for succession. The Scottish Law Commission in 2009 and the Scottish Parliament periodically have both undertaken a review of possible changes and the inclusion of immovable property, subject to the legal rights of succession.

The Law Commission Report on Succession 215 (2009) proposed two options (a) Fixed shares - a modernised legal rights regime and (b) greater testamentary freedom with only dependent children having a right.  The report remains unimplemented in regard to its proposed legal rights. (Scottish Law Commission Report on Succession. Scot Law Comm No 215 (2009) https://www.scotlawcom.gov.uk/files/7112/7989/7451/rep215.pdf)

The effect of its recommendation would that the Court of Session and the sheriff court “would both have jurisdiction in most cases. The Court of Session is to have jurisdiction where the deceased was domiciled in Scotland at death or died owning immoveable property in Scotland. The sheriff court jurisdiction would be based on habitual residence in a particular sheriffdom or on immoveable estate being situated there”. (Ibid Para 1.28, page 7)

In its recent policy document the Scottish Parliament has stated that that it needs to accumulate further information by “research and evidence gathering”, and it would consider “whether outstanding key policy issues should be referred as a law reform project to the Scottish Law Commission”. (Scottish Parliament SPICC briefing, SPICe Briefing Pàipear-ullachaidh SPIC e,  Inheritance law in Scotland – 2025.)

The Parliamentary report concludes that the “law reform journey of inheritance law has the potential not to follow a linear path”.(Ibid p33) It also mentioned that it was over three decades that the Commission made recommendations for reform in this specific area in its first report in 1990. (Scottish Law Commission . Report on Succession. Scot Law Com No 124. (1990) https://www.scotlawcom.gov.uk/files/6812/7989/6684/rep124.pdf) The Scottish Government have not able to find a consensus how to proceed with reform and how to merge the difference between the movable and immovable property in order to perform a uniform basis for rights.

Cohabiting couples who are not married or in a civil partnership have no automatic succession rights in Scotland. If a deceased person dies intestate (without a valid will), and immediately prior to their death they were domiciled in Scotland and cohabiting with another person, then Section 29 of the Family Law (Scotland) Act 2006 allows the cohabitee to make an application to the sheriff court or at the Court of Session for an order for financial provision. There is currently a 12-month time limit for the claims to be lodged following the date of death under Section 78 of the Trusts and Succession (Scotland) Act 2024.

2) Distinguishing moveables and immoveables

The Scottish rules of heirship apply to movable property in the case of the foreign-owned estates discharged under a will. The movable property has to be distinguished from the immovable property (immovable heritage) and in Scots law the rights of succession apply only to moveables, not to immoveable property. In Scots law it will be subject to the concept of renvoi, which exists as a principle of application in this jurisdiction because of the mixed heritage of civil and common law.

The succession rules enable those seeking to apply under the foreign law to enforce the heirship law of that system or when applying that foreign law under that system’s conflict of law rules. This concept of private international rules allows the courts to then apply the rules from Scotland or, for that matter, the rules of another system. It operates on the basis that when the court of one country refers a case to the laws of another jurisdiction, the foreign court’s laws may then refer the matter back to the original forum court. In this instance, the court accepts the reference from the foreign court and applies its own domestic laws. (See, Paul Beaumont and Peter McEleavy, Anton’s Private International Law (SULI), 3rd ed, 2011)

Section 4 of the Wills Act 1963 applies this principle in case of Scottish testamentary dispensation. It states that the “construction of a will shall not be altered by reason of any change in the testator’s domicile after the execution of the will”. The essential validity of an alleged revocation of a will is determined by the law of the domicile of the testator at the date of the alleged revocation. This is with respect to moveable property and the law of the place where immovable property is situated where the revocation would affect that property. A will which seeks to revoke an earlier valid will or a provision of an earlier valid will is considered formally valid if the will revoking the earlier will complies with the law of any country under which the revoked will or provision would have been treated as properly executed.

In Scots law, whether the property is classified as moveable or immovable is a question for the law of the place where the property is situated, which corresponds to personal and real property in English law. In the case of immovable property, the applicable law is the law of the place where the property is situated. The Scottish will would apply the inheritance rules if there was an immoveable property in a foreign state governed by its own law and in these cases the UK courts will not object to any of the rulings of the foreign court. (In the Estate of Maldonado, decd. State of Spain v Treasury Solicitor [1954] P 223 CA, at 248, the court held that “in accepting the foreign state’s law of succession, English law recognises the foreign state as being the arbiter of what the succession is to be”.)

The will, if it states that a person domiciled in a foreign state has intended the laws of that state to apply, will override any difference in the interpretation of the will in the distribution of the estate. The Scottish courts would apply the rules of succession law to the deceased’s estate if the court established that the deceased was domiciled in a country where the foreign law governs the inheritance. The distinction between the movable and immovable property law is a complex one and in 2014, the Land Reform Review Group, an independent review group set up by the Scottish Government, published its final report in which it recommended the abolish the distinction between heritable property (land and buildings) and moveable property (everything else) in inheritance law. (Land Reform Review Group. (2014). The Land of Scotland and the Common Good - Report of the Land Reform Review Group. Retrieved from https://www.gov.scot/public)

Conclusion

The share of legal rights in succession allows a beneficiary entitlement that is dependent on who survives the deceased. Where a spouse or children survive the deceased, they are entitled to half of the moveable estate. If there is more than one child, each child is entitled to the relevant proportion of that half but their share is not increased by other children electing not to claim. Where there is a spouse and children, the spouse is entitled to one third of the moveable estate and each child is entitled to a proportionate share of a third.  

There is a difference between the movable and immovable property because these rights apply to the latter and not the former. There have been various consultations but no reform has been proposed and the preservation of landed interests and the ‘fairness’ of the consequences of amendments are the main bar. The Scottish Government have consulted on the need for reforms but there is no consensus on how to proceed. In order for greater clarity in the rules and more equable outcomes, this distinction ought to be removed.