Under Scots law, certain family members have a legal right to a portion of the deceased’s estate, regardless of what the deceased’s Will states. The law applies to make it impossible to completely disinherit certain family members. These rights are referred to as “Legal Rights”.

In many cases, the family of the deceased will be content to follow the terms of the deceased’s Will. However, Legal Rights must be considered in every case. When drawing up your Will and making succession plans for your family, consideration needs to be given to the potential impact of a claim – on the family, their finances and any business assets owned.

Who is entitled to Legal Rights?

The deceased’s spouse or civil partner, and children (including adopted children) are entitled to claim Legal Rights.

If a child of the deceased has predeceased them, their children (the deceased’s grandchildren) are entitled to claim Legal Rights that would have been available to their parent.

How are Legal Rights calculated?

Legal Rights apply to moveable property, which includes: cash, bank accounts, savings and investments, insurance policies, vehicles, household contents and personal effects. This is known as the “moveable estate”. Legal Rights cannot be claimed on any buildings or land. (*There is however sometimes an exception to this rule in relation to certain business assets, which is noted below.)

Legal Rights are calculated on the value of the “net” moveable estate – that is, the total moveable estate less any debts due by the deceased, funeral expenses and legal expenses to the point of obtaining Confirmation.

How much can be claimed?

The amount of the net moveable estate that can be claimed is as follows: –

  • Where there are no children, the surviving spouse or civil partner is entitled to claim a one-half share.
  • Where there is no surviving spouse or civil partner, children are collectively entitled to claim a one-half share.
  • Where there is a surviving spouse or civil partner and children, the spouse/civil partner may claim a one-third share and the children may claim a one-third share collectively.

The remaining assets in the estate are then dealt with in terms of the Will.

Entitlement under the Will vs Legal Rights

Legal Rights claimants can choose either to take their entitlement under the Will or take their share of Legal Rights, they cannot take both.

The process of claiming Legal Rights

The Executors have a duty to inform all possible claimants of their entitlement to Legal Rights. A calculation of the net moveable estate should be prepared and submitted to the potential claimants, who must then decide if they want to claim their Legal Rights or not. The Executors (or any solicitor acting for them) are unable to provide the claimants with any advice about whether they should claim their Legal Rights or not. Any potential claimants will need to obtain independent legal advice on the matter.

Is there a time limit to claim Legal Rights?

Claims for Legal Rights must be made within 20 years of the death of the deceased. Legal Rights remain a debt on the estate until they are either claimed or discharged.

*The potential impact of Legal Rights on business assets

In certain circumstances where you own or have an interest in a business which owns land and/or buildings, those assets may be converted to moveable property in your estate for the purposes of calculating Legal Rights. This issue can affect partnerships where the deceased was a partner, as well as companies where the deceased was a shareholder.

In the case of partnerships (such as many family farming businesses), the land and buildings owned by the business can be classed as moveable property in certain circumstances and so can be taken into account in calculating the value of the deceased partner’s moveable estate.

For companies that own land or buildings, any shares in those companies held by the deceased will be moveable assets and the value of those shares will be increased by the value of the land and buildings that the company owns.

In either case, including the value of the land and buildings in the calculation of the moveable estate is likely to greatly increase the value of the Legal Rights fund which in turn could impact the future running of the business if those rights are claimed and the funds need to be found to pay them out. In certain circumstances, the business assets may even need to be sold to meet a claim.

What can you do about Legal Rights?

It is possible (though not common) for Legal Rights to be discharged in advance of death but the claimant must be provided with an accurate overview of the entitlement they are renouncing. The claimant must also be given the opportunity to take separate legal advice.

In all cases, we would recommend that you seek appropriate professional advice to determine how Legal Rights claims might impact on your estate. It is particularly important to get expert legal and accountancy advice in relation to any business assets that you own, allowing you to plan accordingly and act to minimise any potential negative impact on your business or family.

For more information or advice on Legal Rights, please do not hesitate to contact our friendly private client team.