Inheritance in Scots law, the interaction of prior rights on intestacy and legal rights, and legislative reform

DISCLAIMER: what follows is a technical blog post on an aspect of the Scots law of succession (inheritance). The law of succession comprises the body of rules that apply in any legal system that provides for the flow of property from the dead (who no longer have much use for property) to the living. Specifically, this post is about the law that applies in a situation of intestacy, where a late Scot has not made any plans for that flow of property post mortem; that is to say, where the deceased left no will or other testamentary writing.

In Scots law, the rules of intestacy allow (where relevant) certain people to make certain claims of a deceased person’s estate, those people being: a spouse or civil partner; a cohabitant; and/or a child (or children, or indeed any descendants of a child or children, who are able to “represent” a deceased parent). (For ease I will generally to children from now on, but note that the legalese of “issue” is sometimes used for offspring. I will also say “spouse” rather than “spouse/civil partner”.)

For better or for worse, these claims are called “legal rights”. As to how much relevant people can claim, I have noted below* how legal rights would be calculated where the deceased is survived by 1) a spouse 2) issue or 3) both. I am not going to explain the policy rationale behind legal rights here as this post is long enough (sorry) but I have blogged on this topic before. Legal rights are only payable from the moveable estate of the deceased (say a car, a bank account, a painting): no legal rights claims can be made in relation to land.

After any and all of these claims are satisfied, the remainder of the estate will then go to a relative (normally a child or children, if there are any). (Where there are no living, eligible relatives, the estate will go to the state.) The ranking here is determined by section 2 of the Succession (Scotland) Act 1964.

Legal rights are not the full story though. Where there is not a will, some other rights come into play. The Succession (Scotland) Act 1964 also deals with “prior rights on intestacy”, in addition to the legal rights which can be claimed from a deceased person’s moveable estate. When it was enacted, the 1964 Act was framed in a way that ensured that these legal rights of the spouse and any children fall to be calculated after the “prior rights” of the spouse partner have been satisfied. These prior rights give the spouse first dibs on 1) a dwelling house, 2) furniture, and 3) a sum of money, within financial limits set by legislation.

The fact that legal rights come after prior rights can be seen in section 10 “Abolition of terce and courtesy, and calculation of legal rights”. The relevant subsection provides as follows:

(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.

I will come back to the emphasised text.

Section 8 and section 9 deal with the “Prior rights of surviving spouse, on intestacy, in dwelling house and furniture” and the “Prior right of surviving spouse to financial provision on intestacy”. As originally enacted, prior rights were paid first, then legal rights calculations would follow. That is to say, they were “the two last foregoing sections” referred to in section 10.

The trouble is, there is now a section 9A. This was inserted by later legislation

The prior two sections to section 10 are section 9 and section 9A. As such, the emphasised text now sends you to one incorrect and one correct section, rather than the two correct sections.

Accordingly, on a literal reading, there seems to be no need to take account of section 8 when calculating the net moveable estate. That means up to £29,000 of (moveable) plenishings will not be excluded from the calculation in relation to legal rights, £29,000 being the current value of furniture and plenishings a spouse is entitled to. If this is to be the case, the legal rights calculation would be made using an over-inflated amount. Performing the calculation on that basis would then deplete the amount that would be left to any surviving family after the payment of legal rights. (Mathematically, this would seem to me to be to the surviving spouse’s benefit in many circumstances, as the remainder of the estate after dealing with legal rights – the “free estate” – would normally go to a relation or relations higher up the hierarchy established by the aforementioned section 2 rather than the spouse.)

I have spoken to a few (academic) lawyers about this. None have told me I am barking up a non-existent tree. It is fair to say we all agree the drafting is not up to best practice, for the very reason that it has been either obscured or defeated by the interposal of a new section 9A.

What would happen were someone to try to argue this point? (I wonder if someone already has?)

One argument would be that “prior rights” naturally come before everything else: the clue is in the name. Fair enough, but statutes should be clear in their substantive terms, and those terms do not mention the word “prior”. Further, a canon of statutory interpretation is that recourse to headings etc. is generally to be avoided, and “prior right” or “prior rights” only appear in the headings.

There might be other arguments***. Of these, there might be a strong appeal to common sense and to the clear legislative intention were this to ever come before a court.

Be that as it may, the legislation should be fixed. There is a recurring debate that the law of succession in Scotland requires some attention. Consider this another contribution to that debate.

*Where the deceased is survived by a spouse but not children, the spouse can claim 1/2 (50%) of the [net] moveable estate. Where the deceased is survived by issue (i.e. a child or children) but no spouse, the issue can claim 1/2. Where the deceased is survived by both a spouse and issue, they can claim 1/3 each. Legal rights cannot be claimed in relation to immoveable property (i.e. land).

** When it was passed, the 1964 Act originally referred to “jus relicti, jus relictae or legitim”. This was amended to “legal rights” to take account of the introduction of (same-sex) civil partnerships by the Civil Partnership Act 2004.

***One other argument that I discussed with an expert in succession law is that reference could be made to section 9(6)(a), where the definition of “net intestate estate” for the purposes of the financial provision element of prior rights is clarified as being post-distribution of s 8 rights. A subsequent section might logically follow a similar approach.

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About basedrones

Bachelor of Laws. Scots lawyer working at the University of Aberdeen. English law qualified. Took far too long to write this bio. Blogs on legal issues, with occasional veering into other purportedly intellectual stuff from time to time. Tweets about legal issues, education, law clinics, fitba, music, rogue cell division and not at all about politics at @MalcolmCombe.
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5 Responses to Inheritance in Scots law, the interaction of prior rights on intestacy and legal rights, and legislative reform

  1. Neil King says:

    Am no expert on the canons of statutory interpretation but can’t help thinking any sensible court would ignore s9A as not having been intended by Parliament. (BTW why am I seeing adverts on this page? Yuck!)

    • basedrones says:

      Adverts = free plan. That is the WordPress way, pretty much.

      EDIT updated on 19 February – and yes, I agree there is a certain attraction in just saying a sensible court would resist the urge to allow section 9A to mess things up, but I am not sure we can be 100% certain about this and as such the legislation should be fixed.

  2. Ross Macdonald says:

    Dear Malcolm,
    An excellent point which had never occurred to me! My instant thought is as follows:
    1. no “claim” is made under s9A, so the only interpretation which makes sense of s10 is to read it (as before) as referring to ss8 and 9;
    2. s 10 operates on the “net moveable estate that remains…” But s 9 in turn operates on “net intestate estate that remains [after s 8]” – the s 8 values have to be deducted first. The 2 sections aren’t independent. Even if one were to take s10’s “2 last sections” literally (= 9 + 9A) I don’t see that one can logically then add back in the furniture etc which had already been deducted (and whose deduction s 9 acknowledges). “Remains” implies a sequential process. Once deducted, the assets can’t be un-remained. In this, I don’t rely on the headnote at all. (I suppose this is basically your (9)(6)(a) point but I would put it more strongly.)
    To be sure, my view is coloured by what we all agree on (the legislative intent + common sense) but I think if it came to court the current words are still compatible with the common sense.
    I dare say the court would also take into account that estates had (I hope!) been distributed for 38 years on the “common sense” version.
    I agree s10 could usefully be tidied-up to avoid any possible doubt.
    Ross Macdonald

    • basedrones says:

      Ross,

      This is very much appreciated, thank you.

      Your point 1 is well made, I agree that is something to add to the “please ignore section 9A when it comes to the legal rights calculation” argument, although as with the other arguments I raised myself I don’t quite see it as a knockout blow.

      Your point 2 is something to think about but I think the “remains” in section 10(2) can still make sense without section 8 and that section 10, and its “remains”, can be read as independent. The significance in section 9’s “intestate estate” is not so much about allowing a calculation to be made out of the moveable estate, but rather it is about the cash that comes out of the WHOLE estate, not just the moveable estate, and there is no particular calculation (in terms of performing a multiplication) to perform: if the whole estate is intestate estate is worth less than the cash entitlement, the spouse just gets that; if less, there is a simple subtraction (albeit there would be the accompanying calculation to allow for the payment to take place in rateable shares across heritable and moveable property, as necessary, per s 9(3)).

      Anyway, as I think we all agree, let’s tidy up section 10!

      Cheers,

      Malcolm

  3. Pingback: My 2018 in review | basedrones

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