Consultation on the Law of Succession – Some Thoughts

Let us begin with a variation of an old joke.

Tam Reid was a farmer and a shrewd man. Before leaving this mortal coil, he directed that his family should keep his death notice in the local newspaper short. After all, the local newspaper charged for each word in the notice. His preferred wording was as follows:

“Tam Reid, from Bogheid, is deid.”

On Tam’s passing, the bereaved family duly put the notice in the newspaper. Staff at the newspaper could not help but feel that this notice was short, and contacted the family to ask them if they wanted to include another few words, at no extra cost. The family gratefully agreed to this, and submitted the following death notice.

“Tam Reid, from Bogheid, is deid.

TRACTOR FOR SALE”

Welcome to the law of succession, also known as inheritance, which regulates what happens to your property when you die.

The rules of succession apply in circumstances where you have left a written note of your last will and testament – perhaps directing what is to happen to your farm, your tractor, your investments and your beloved collie called Dìleas – and when you have not. Tam’s story gives a brief insight into a situation where a will has been left. The wishes of a deceased person are important, but so too are the interests of the family of that deceased person, as are the interests of society as a whole. A properly functioning system of succession law will seek to balance those interests in a way that is suitable for contemporary society, but that is not always an easy balance to strike. And where there is no will, the property of a deceased person will need to, somehow, be distributed. Ideally that should happen in such a way that people close to or financially reliant on the deceased are not overlooked, but once again that involves the balancing of many different considerations.

Whilst the law of succession can be thought of as a standalone category, it touches on other areas of law and practice, including family, property and tax. (Inheritance tax is reserved to Westminster, so no more will be said of it here.) This can lead some people to gloss over succession, or perhaps view it through the prism of another specialism: for example, those interested in land reform might not be thinking about the modern place of the family unit when commenting on the ideal model of succession for a fair distribution of immoveable property across society.

It is also of crucial importance to everyone. As the Flaming Lips celebrate, “everyone you know some day will die.” If you are lucky enough to live to a healthy age in Scotland, you will almost certainly have to contend with an executry at some point. All of this makes getting succession law right very important.

The most recent Scottish Government consultation on the law of succession closed yesterday. It wrestled with a lot of different areas and I can do no better than to direct you to Dr. Dot Reid of the University of Glasgow’s analysis of it. In the headline of that blog, you will immediately see land reform and succession being mashed together. Land reform and succession reform have not always been analysed together in this ongoing pre-legislative process (see this from Reid’s colleague Dr. Frankie McCarthy), but it is fair to say the current land reform debate has reinvigorated the succession debate.

I swithered about whether or not to put a response in. With my own involvement with the Land Reform Review Group, I am more familiar with the land reform angles, and I almost felt I should leave this to others. Then again I have taught succession at university: former students reading this may recognise my bad joke and references to songs that reference the inevitability of death. Eventually I swithered towards responding, and at the eleventh hour, I put in a selective response (PDF).

From a property lawyer’s perspective, the headline news is the potential removal of the different treatment of immoveable and moveable property. At the moment, the effect of this differentiation is to allow land and buildings to be left in a will without fear of challenge from a surviving spouse, civil partner or child. This compares to a situation where moveables (perhaps a tractor, investments or a collie dog) are left in a will, and a partial challenge to the will could be made in relation to the moveable estate.

As already noted on this blog, this differentiation looks to be doomed, and in principle I think this reform does make sense. The differentiation is not generally found in other jurisdictions and it can have what appear to be arbitrary effects, that might stem from lifetime choices that were made without considering succession. This reform was advocated by the Land Reform Review Group.

Of course, there are always difficult cases. From a land reform perspective, this difficult case is flushed out in Chapter 3A of the consultation, which looks at agricultural units. The division of a large estate (where such a large estate is owned by a natural person) into two or more units might not seem objectionable to some, but what about a smaller family farm that simply could not function when sub-divided in that manner? Never mind Tam’s tractor, what would happen to Bogheid, assuming Tam is survived by two sons and two daughters where three of the children are keen farmers but two of them are so thrawn as to be unable to reach a resolution amongst themselves as to what to do with the farm?

Here I extract my responses:

Q31 Should there be exemptions (limited or otherwise) for certain businesses from claims for a spouse/civil partner’s legal share where there will compromise the commercial viability of the business?

[The options were Yes/No/Don’t know. Curmudgeon that I am, I did not answer.]

Please give reasons for your answer:

My answer adopts the form of “No, but…”.

In principle, I am in favour of a system that does not discriminate between different categories of immoveable property. That said, a narrow exception might be appropriate if the future of a viable unit was actually threatened. Guidance might be sought from section 13 of the Crofters (Scotland) Act 1993, which prevents a forced sale of a croft tenancy area from taking place where that sale would leave the remaining estate no longer viable.

32 If there were to be exemptions from claims for legal share, do you think it would be possible to define those types of businesses which would be exempt with precision?

[Again, I did not answer.]

Please give reasons for your answer:

I do not think it would be impossible, but I appreciate it could be tricky. This section of the consultation is about agricultural units, so perhaps linking the test to agricultural output (current and prospective, after a forced division).

A rule of blanket application could have an unwelcome impact on small units in the agricultural sector, so I offered one model where an apparently absolute system can be relaxed. There may be other examples, and indeed another thought occurred to me post-submission in relation to co-owned property.

The law of Scotland already has a system in place to deal with the situation where owners of an item in shared ownership fall out. One or more of them can raise an action to either: a) divide the item; or b) where that is not possible, sell it. Division does not need to be impossible in the physical sense: one important case related to a co-owned estate on the Isle of Bute and the court chose not to parcel it up into smaller sections, as that would affect the viability of the estate as a whole. Perhaps something similar could be developed. There may also be a role for devices like lifetime renunciations of rights to a farm (for children who are not interested in farming), so a degree of flexibility could be built into the system to reflect what families agree to.

These are not simple issues to deal with and it is right that the consultation takes on the views of many different sections of society. Holyrood and its committees will have much to consider and any reforms will have a profound effect: as Bruce Springsteen notes, “everything dies, baby, that’s a fact“. Which leads on to the final point I made in my consultation (and elsewhere): if there is reform, this must be accompanied by a blitz of clear and comprehensible publicity to reflect its far reaching impact. Without that, Tam’s children might find themselves arguing about far more than the words of a death notice.