The recent Succession (Scotland) Bill has now been given Royal Assent to become the Succession (Scotland) Act 2016. It contains a number of technical changes to current succession law in Scotland and brings about the first major amendments to this area of law since the Succession (Scotland) Act 1964. There are more reforms planned by the Scottish Government, most notably to ‘legal rights’ however here we describe the most interesting and perhaps relevant changes implemented by the most recent Act.
The changes to the law on executors requiring a Bond of Caution for Small Estates are the only ones that are currently in force.
Caution is a product provided by an insurance company that an executor requires when dealing with the estate of a person who has died intestate (i.e. without leaving a Will). It gives any beneficiaries protection should their entitlement under intestacy be adversely affected due to maladministration by an executor.
Acquiring caution can often be expensive as it requires the involvement of a solicitor. In estates of low value this can drastically reduce the overall size of the estate and cause more angst for families at an already difficult time. As a result of the new Act, caution will not be required for estates with a value of less than £36,000 (known as ‘Small Estates’) meaning administration costs will be significantly reduced as there will be no requirement to instruct a solicitor.
The new Act will cause any provisions in a Will in favour of a former spouse or civil partner to be automatically revoked when the relationship comes to an end. The ex-spouse or ex-civil partner is treated as having predeceased the testator (person making the Will) except where that person was appointed as guardian under the Will. A testator may still wish their former spouse or partner to benefit but this must be expressly stated in the Will.
The above treatment is also given to special destinations. This is where a property is owned by ‘Mr and Mrs Smith and the survivor or survivors of them’. Ownership of this type would mean the deceased person’s share of a property would pass automatically to the surviving owner – irrespective of whether the individuals had been divorced for a number of years. Consequently any attempt to pass on a property (or share of a property) in a Will would be meaningless due to the existence of the special destination. As mentioned above, the new Act now revokes any special destinations upon divorce, annulment or dissolution of a marriage or civil partnership.
The Act also amends how revoked Wills are to be treated. A Will which has been revoked by a subsequent Will cannot now be revived if the latter Will is then revoked. To give an example: Mr Smith draws up a new Will, Will Y and in it revokes his previous Will, Will X. Mr Smith then decides he preferred the terms of Will X and proceeds to destroy Will Y. Under the new Act Will X cannot be revived, whereas previously this would have been the case. If Mr Smith wants to use the terms of Will X, a new Will containing these terms must be executed. For practitioners this may spell the end of retaining numerous old Wills of clients, that no doubt take up vast amounts of space in strong-rooms and safes across Scotland.
The new Act allows the Court of Session or Sheriff Court to rectify a Will provided the Court is satisfied that it does not accurately express the testator’s intentions. There are some criteria which require to be met for this to occur:-
If a person due a legacy under a Will dies prior to receiving the legacy, then his or her children are entitled to receive that legacy. This can only occur if the original legatee is a direct descendent of the testator and the terms of the Will do not expressly state that the testator intended otherwise.
Section 9 of the new Act tackles some aspects of survivorship. Should two individuals die simultaneously in a common calamity, or in a situation where it is unclear who survived whom then they will be treated as having failed to survive each other. Currently the younger person is presumed to survive the elder person unless they are spouses or civil partners where they are presumed to have died simultaneously.
Often a Will would make provision for an individual to survive the testator for a set period of time in order to be entitled to a legacy or benefit. If it is unclear whether this individual survived for that specified time then they are treated as having failed to survive the testator and the benefit will fall to a substitute beneficiary (if stated, otherwise to the residue).
If a trustee or executor has distributed assets to the wrong beneficiary however the distribution was made in good faith and reasonable enquiries were made as to the identity of the beneficiary, then the executor or trustee will not be held personally liable. It will however be interesting to note what the Court will consider ‘reasonable enquires’.
Whilst the changes implemented by the new Act are technical in nature, with more substantive changes to succession anticipated in future legislation, they clarify an area which had been problematic. At the time of writing the only changes currently in force are to the requirements for a Bond of Caution.
What the new Act does highlight is the importance of a well drafted and regularly updated Will, both of which help to avoid the issues the new Act is designed to tackle.