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As the Scots Prepare to usher in a New Year, there has been a review of three areas of Law which can affect not just those living in Scotland but people born there and people with assets there.
Scottish Succession by Forced Heirship
It’s easy to forget that the law in Scotland is very different to that in England and Wales. Where there is no Will (Intestacy) the amount which passes automatically to the surviving spouse is not only less than that inherited by a surviving spouse in England, but the calculation is more complicated. The Scottish Government has now announced that, although the rules will not be the same as those for someone south of the border, they are to be brought more in line with the position for a surviving spouse and children in England and Wales. However, this is still a long way off becoming law and it remains important to make a Will.
In England and Wales the starting position is that people have a right in their Wills to benefit whomever they choose and similarly to exclude whomever they choose. This is subject to the right of certain people (e.g. a spouse or dependant) to challenge the Will in Court, on the basis that its provisions are unreasonable. Scotland, on the other hand, leans to Europe in this respect and has a system of “forced heirship”.
In Scotland there is no right to claim to have the Will overturned. However, “movable property” must be left in accordance with Scottish Statute. Effectively, the spouse receives one third and the children share one third. The definition of movable property can be rather a movable feast; generally it means savings and leaseholds. The proposal is to reduce testamentary freedom in Scotland by extending forced heirship to apply to all assets.
Why does it matter? Because if you are treated as “domiciled” in Scotland (a complex idea but roughly equivalent to your “home country” or, more worryingly, simply to the place of birth of your father), then you may not be able to leave assets that you own, even in England and Wales, in the way in which you wish.
The difference between movable and immovable property largely relates to land issues. The changes are being discussed as part of the Scottish Government’s long term plans for land reform.
There is a proposal, which will affect any owner of a large Estate in Scotland, to give the Scottish Government powers to “intervene” against the landowners in favour of the local community. Full details of the proposal are not yet available and they will be subject to consultation.
Lasting/Continuing Power of Attorney
In England a Lasting Power of Attorney enables us to choose someone to help us should it become necessary in the future. It can cover our finances or medical matters. There is a similar version in Scotland called a Continuing Power of Attorney. In England and Wales the Lasting Power of Attorney is lengthy and can be surprisingly complex. However, Solicitors, the Office of Public Guardian and the Courts are pretty much in agreement on their validity and interpretation. Not so in Scotland. There has recently been some panic and uncertainty caused by a judgement which said that the standard form provided by Scotland’s Office of Public Guardian does not meet all the legal requirements. It seemed as though all Continuing Powers which had used the form would be invalid! Unsurprisingly, the Office of Public Guardian then took a Test Case to a Higher Court. That Court, to everyone’s relief, took pains to decide that Continuing Powers of Attorney which followed the standard form would still be valid.
Whilst not suffering from quite the problems experienced in Scotland, a Lasting Power of Attorney in England or Wales can easily be miswritten if prepared without legal help. They are, however, invaluable as a form of insurance for everyone who travels or has a business or has assets irrespective of their age. The health one is, of course, equally important, even if you have no assets other than your own health.
Hewitsons LLP does not advise directly upon the law in Scotland, but benefits from its founding membership of Law Exchange International through which it works closely with Scottish firm Lindsays. For more information on any of the about information please contact Carolyn Bagley on 01908 247015 or click here to email Carolyn.