Recently, Brodies welcomed a new Senior Associate to the Personal & Family Team. Nadine Walton is a solicitor qualified exclusively in England & Wales, specialising in the field of wills, trusts, and estate administration and planning. In this series of three related articles, she looks at a few of the key distinctions pertinent to wills, trusts, and estates for clients domiciled in England and Wales, as compared to those domiciled in Scotland.
In this area, the distinctions between the two regimes abound, and are vast. At least where testate estates are concerned (where someone dies with a valid will in place), England & Wales can possibly be seen as the jurisdiction taking a less prescriptive approach.
In Scotland, a jurisdiction with its roots in Roman “civil” law, a form of “forced heirship” still applies to estates of Scottish domiciled deceased individuals.
These rights are known as “legal rights” and apply whether or not the individual in question leaves a will. Legal rights operate by prescribing that an entitlement to a specific share of the net “moveable” estate can be claimed by the deceased’s spouse (or civil partner) and/or children. The value of the legal rights claim will depend on who survives the deceased. However, it will equate to at least one-half of the net moveable estate in every case. Whilst the individuals entitled can disclaim their legal rights, if they do not, then the amount due is treated as a debt due to be settled from the estate. It accordingly must be paid to the entitled individuals.
Testamentary freedom, relatively speaking
In contrast, England & Wales remains one of only a few regimes in Europe to preserve the principle of testamentary freedom, albeit subject to some caveats.
The starting point is that, if you want to leave your entire estate to charity, you can.
None of your surviving relatives have automatic entitlement to a share. Certain individuals can however bring a claim for “reasonable financial provision” from your estate under legislation called the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”).
Individuals who are eligible to bring a claim under the 1975 Act include (among others) spouses, children, long-term cohabitants, and individuals financially supported by the deceased.
Where a claim is made by any eligible party aside from a surviving spouse, the question of “reasonable financial provision” for that individual is assessed on what is required for their maintenance alone. Generally then, a “self-sufficient” adult child who has not received financial assistance from the deceased for many years will face an uphill struggle in bringing a successful claim under the 1975 Act.
For individuals dying without a will, each jurisdiction has a set of legal rules (the “intestacy” rules) which apply to determine the distribution of the estate. And, as you might have guessed, the rules are quite different north and south of the border.
For Scottish-domiciled individuals leaving a spouse, the spouse has certain “prior rights”, which will see them take prescribed financial benefits from the estate before their legal rights (and those of any “issue” of the deceased) are considered. Only after these rights are satisfied do the intestacy rules apply to the remaining estate.
In England and Wales, the intestacy rules can be considered exclusively.
The substantive terms of these rules can produce very different distributions where an “English” domiciliary dies intestate with the same family circumstances as a Scottish-domiciled deceased party.
For instance, in England & Wales, the intestacy rules now reflect that if the deceased leaves a surviving spouse and no “issue”, the surviving spouse will receive the entire estate.
In Scotland, this is not the case, and surviving parents and/or siblings of the deceased will be entitled to the whole residuary estate (after discharge of prior and legal rights), in preference to the surviving spouse.
A final word on domicile
A term I’ve been throwing around in this series of articles quite liberally is “domicile”. This concept is a key one underpinning succession issues in both England & Wales, and Scotland. It therefore matters.
Your “domicile” will be determinative in the question of whether you should be preparing a Scottish or an English will, where that will should be “proved” after your death, and how your estate will be distributed.
And here’s the snag.
Domicile is not a straightforward concept. It does not simply mirror your residence, and it’s potentially dangerous to assume this. In an extreme case, an individual who has spent most of their adult life living and working in Scotland, could, by reason of the background of their parents and/or other connections to England & Wales, have a “domicile” south of the border. The opposite can of course apply to “English-resident” individuals with significant factors connecting them to Scotland.
If you have links to both jurisdictions, it’s therefore important you take some time to consider the matter of your domicile, and the issues arising from it.
The content of these articles provides some indication of just how significantly the legal rules at the heart of estate planning can differ north and south of the England/Scotland border. Yet the practical reality is that a vast number of our clients have connections to each jurisdiction, whether in terms of their own family history, the current whereabouts of their proposed “beneficiaries”, or the location of their property interests. Brodies are uniquely placed to be able to assist with succession matters in each jurisdiction, as well as those that may span the two, given the expertise held by our English and Scottish qualified teams, who are accustomed to working closely together.
Nadine Walton, Senior Associate at Brodies.