A Comparison of the English and Scottish Rules of Intestacy

A Comparison of the English and Scottish Rules of Intestacy Part I

John Gorham, MBA, FCIB, FTII, TEP
The Royal Bank of Scotland plc
(From Issue 8,July 1999)

1 Introduction

1.1 The purpose of this article is to compare the intestacy rules of England and Scotland. England (with Wales) and Scotland have of course separate legal jurisdictions in spite of common membership of the United Kingdom and this is reflected in significant differences in their rules of succession, including devolution on intestacy.

The trend over the last few centuries has, arguably, been towards a convergence of the two constitutions but the advent of the Scottish parliament suggests a part reversal of that trend, in domestic affairs at least. What impact that might have on succession laws in general, and intestacy laws in particular, is considered briefly later (section 6.2).

Incidentally, as far as Wales is concerned, the author understands that the Welsh assembly will not have powers to legislate on matters of succession.

The remarks for both England and Scotland are directed to the law at the beginning of April 1999.

1.2 The author wrote for the then "Trust Operations Gazette" in 1984 an essay "Succession and Trusts: The Calcutta Cup" which was a more wide-ranging comparison of English and Scottish laws. He has drawn on parts of that material for the purposes of this essay.

1.3 The current legislation governing intestacy in both countries emanates from the United Kingdom parliament. The English rules are derived from the Administration of Estates Act 1925 sections 46-49 (as amended, not least by the Intestates Estates Act 1952) and the current Scottish ones by various sections of the Succession (Scotland) Act 1964.

The concept of intestacy is, as might be expected, similar in the two countries. Broadly, intestacy arises if a person does not dispose of his or her property on death by will or by other disposition (e.g. nomination). Hence it can arise, among other ways, if: there is no attempt to make a will;

· there is, on the face of it, a will but it is invalid (e.g. through lack of formality or capacity);

· there is a valid will but it fails, wholly or partly, to dispose of the testator's estate (e.g. through not dealing with all assets, failure through uncertainty or being contrary to public policy);

· there is the failure of a beneficiary's interest (e.g. through not meeting a condition or contingency, by forfeiture, by disclaimer).

1.4 Before delving into the rules themselves, however, it is helpful to look at the extent of freedom of testamentary disposition in each country.

2 Freedom of testamentary disposition

2.1 Testators in both England and Scotland enjoy a basic freedom of testamentary disposition subject to certain constraints. The constraints vary, however, between the two countries.

For both, on the other hand, assets may devolve on death other than by will. The following are examples common to, or with equivalents in, both countries:-

In England, property might be held as "beneficial joint tenants". On the death of one joint tenant, the benefit passes by survivorship directly to the survivor or survivors. Heritable estate (principally landed property) in Scotland (also termed "heritage") may be subject to a special destination such as where it is held for "H and W or the survivor". If H dies first, his interest in the property passes direct to W.

Rights under approved pension schemes, e.g. death benefits written under discretionary trusts albeit the trustees may be guided by the known wishes of the deceased member.

2.3 Turning to constraints, the Inheritance (Provision for Family and Dependants) Act 1975 (as amended) gives English courts wide powers to amend the will or intestacy of the deceased to make financial provision, or better financial provision, for certain disappointed "dependants". The Act applies in respect of persons who die domiciled in England and Wales.

The potential claimants include the wife or husband of the deceased, a former wife or former husband who has not remarried, certain persons who had lived with the deceased as a spouse, a child of the deceased, a person treated by the deceased as a child and a person maintained by the deceased immediately before his or her death. They need to demonstrate that the deceased's will or the rules on intestacy, or a combination of the two, do not make "reasonable financial provision" for them.

The court has powers, provided specified criteria are met, to order periodical payments or lump sum payments out of the deceased's estate. As well as "free estate", the court's jurisdiction extends to joint property, assets subject to a nomination, donationes mortis causa and dispositions made within six years of the death intended to defeat applications for financial provision under the Act.

There is no direct equivalent in Scotland to the 1975 Act. Spouses and children may claim "temporary aliment" and "continuing aliment" - aliment being maintenance - against the estate although, in practice, they are rarely claimed nowadays.

2.4 Whilst neither England nor Scotland has a system of community of property, Scotland has something akin with "legal rights" of spouse and issue to shares of the deceased's moveable estate (roughly equivalent to personal estate in England). Legal rights over heritable estate were abolished in 1964.

Legal rights are not strictly rights of succession but rather are claims in the nature of debts from the deceased's estate. The claimants cannot, however, compete with the creditors of the deceased; their claims attach to the free moveable estate remaining after the deceased's debts have been met and, in the case of intestaqcy, after satisfaction of the "prior rights" of a surviving spouse (see section 3.3).

A person may, however, defeat these claims in his net moveable estate by, during his lifetime, converting it to heritable estate or merely giving it away. Only genuine transactions will be recognised in this respect and sham transactions will not be allowed to defeat legal rights.

The rights are "jus relictae" and "jus relicti", in the case of the widow and widower respectively, and "legitim" (or "bairns" part") which is the portion of moveables falling to issue.

If the deceased is survived by spouse and issue, the moveables fall to be divided into three parts: one third to the surviving spouse, one third to the issue and the remaining one third (known as the "dead's" part) is free to pass under the will or under the ordinary rules of intestacy.

If there is spouse and no issue, or no spouse but issue, there is a division into two parts: one half to the spouse or issue, as the case may be, and the other half to the dead's part. If there are no spouse or issue, there are no legal rights.

As far as legitim is concerned, children (including adopted and illegitimate children) claim per capita while the division among the issue of a deceased child is per stirpes.

The doctrine known as "collation inter liberos" is designed to preserve equality among the claimants on the legitim fund. Hence, if a child has received advances from the parent during his lifetime, he must as a rule bring these advances into account for allocating the legitim fund where there is more than one claimant. Remoter issue must collate both advances to themselves and also the appropriate proportion of advances made to the person whom they represent.

Whether or not a provision falls to be collated depends on its nature and circumstances. Advances "made for the purpose of setting a child up in trade or a settlement in the world or for a marriage portion" must be collated. Collation has no bearing on the calculation of the fund for legal rights of the spouse unless there has been a bargain between the spouse and issue.

Legal rights may be expressly discharged by the person prospectively entitled to them while the ancestor or spouse is still living. Legal rights may also be renounced after the death of the spouse or ancestor: this will have the effect of increasing the dead's part of the estate whereas a lifetime discharge will benefit partly the dead's part and partly the other funds for legal rights. A discharge or renunciation of legitim may only be made by a person over eighteen years.

Legal rights may be claimed at any time up to twenty years from the date of the deceased's death (unless previously discharged). Where, however, the deceased died testate, a beneficiary cannot claim both legal rights and a legacy under the will.

Legal rights, being in the nature of debts, should strictly be settled in cash rather than in specie. It is possible for a spouse or issue to take an appropriation of assets from the estate - in effect, to buy assets from the estate.

2.5 As noted, the intestacy rules are potentially subject, in England, to claims under the 1975 Act and, in Scotland, to legal rights. This leads into the intestacy rules themselves.

3. The intestacy rules - overview

3.1 The broad order of priority for the two jurisdictions is similar, i.e. spouse, children and remoter issue, parents and siblings, remoter relatives. The devil lies in the detail.

3.2 In England, the extent of claims of the surviving spouse depends on the value of the estate and whether or not the deceased has also left issue or certain other relatives.

Where there is issue, the spouse takes the "personal chattels" (as defined in section 55(1)(x) of the Administration of Estates Act 1925), a legacy of £125,000 (or the entire residuary estate if less) and the income from half the residue of the estate. Subject to this, the estate is held on "statutory trusts" (see section 4.3) primarily for the children.

Where there are spouse, no issue, but parents or brothers and sisters (or their descendants) of the whole blood of the deceased, the spouse's legacy is increased to £200,000 and she or he receives one half of the residue of the estate absolutely. The other half of the residue passes to the parent or parents, if surviving, or, failing them, to the brothers and sisters or their descendants on the statutory trusts.

If there are no issue, parents or brothers and sisters of the whole blood (or their descendants), the spouse receives the whole estate outright.

If there is no spouse but issue, the whole estate is held for the issue to the exclusion of other relatives.

Failing spouse, issue and parents, the estate is held on the statutory trusts for other classes of relatives of the deceased so that a class of a higher order is preferred to one of a lower order. More detail of the classes appears in section 3.5 but the lowest in the order is uncles and aunts of the half-blood. The classes are confined to descendants of the intestate's grandparents and the grandparents themselves.

In the absence of all specified relatives, the estate passes to the Crown (or, if appropriate, the Duchy of Lancaster or Duke of Cornwall) in bona vacantia. The Crown (etc) has a discretion to make ex gratia payments to dependants and other persons for whom the intestate might reasonably have been expected to provide.

3.3 In Scotland, the surviving spouse is entitled to "prior rights" after the just claims of the deceased's creditors have been fully met.

Firstly, the spouse is entitled to the deceased's interest in the dwellinghouse (subject to heritable debts secured over the interest). There is a limit of £130,000 (net of securities) on the deceased's interest and, if the value is more, the spouse is entitled to receive the sum of £130,000 rather than the house itself.

Secondly, the spouse is entitled to receive "furniture and plenishings" (roughly equivalent to "personal chattels" in England excluding heirlooms and usually a motor car) up to a value of £22,000. If the value is more, the spouse may choose items up to a value of £22,000.

Thirdly, the spouse is entitled to a legacy of £35,000, if the deceased left issue, and £58,000 if there is no issue. The sum in question has to be found rateably out of the remaining heritage and moveables.

If any moveable estate remains, legal rights (as described above) have to be satisfied and a surviving spouse is entitled to her or his legal rights as well as prior rights.

Any remaining "free estate" (including the dead's part of moveables and heritage not subject to the prior rights of a spouse) then devolves on the classes of relatives specified in section 2 of the 1964 Act so that a class higher in the order is preferred to one lower down. Relatives of the whole blood take priority over relatives of the half-blood.

There is a difference with England in that all possible (blood) relatives can qualify for benefit (i.e. they are not limited to grandparents or their descendants). Once a class is "exhausted", succession continues to the next line of ascendants, followed by collaterals (i.e. siblings), and so on.

In a complete absence of relatives of the whole or half-blood, the estate passes to the Crown as ultimus haeres. The Crown has a discretion to benefit people unrelated to the intestate, e.g. those with moral claims on the estate.

3.4 The amounts of the statutory legacies for the English rules and those relating to prior rights for the Scottish ones may be revised by statutory instrument. The last revision for the former was by the Family Provision (Intestate Succession) Order 1993 (SI 1993/2906) for deaths on or after 1 December 1993 and for the latter by the Prior Rights of Spouse (Scotland) Order 1999 (SI 1999/645) for deaths on or after 1 April 1999.

3.5 The following table is an attempt to compare, in summary form, the two sets of rules by reference to particular classes of beneficiaries. A number of refinements are discussed in the next section

Spouse and Issue	Spouse and Issue
· personal chattels · statutory legacy of £125,000 · income for life from half of residue	· prior rights to dwelling house [to £130,000] · prior rights to furniture and plenishings [to £22,000] · prior rights to cash of £35,000 · legal rights
Spouse, no Issue, Parents/Brothers and Sisters of Whole Blood	Spouse, no Issue, Parents/Brothers and Sisters of Whole Blood
· personal chattels · statutory legacy of £200,000 · half of residue absolutely	· prior rights to dwelling house [to £130,000] · prior rights to furniture and plenishings [to £22,000] · prior rights to cash of £58,000 · legal rights
Spouse, no Issue, Other Relatives	Spouse, no Issue, Other Relatives
· whole estate absolutely	· prior rights to dwelling house [to £130,000] · prior rights to furniture and plenishings [to £22,000] · prior rights to cash of £58,000 · legal rights Receives free estate also if no: · Parents · brothers and sisters of the whole blood or half-blood or their descendants

Spouse and Issue	Spouse and Issue
Residue, subject to half the income for life to spouse, on the statutory trusts	· Legal rights · Free estate (i.e. estate after debts, prior and legal rights of spouse) to children per capita or remoter issue per stirpes
No Spouse, Issue	No Spouse, Issue
Whole estate on the statutory trusts	Whole estate to children per capita or remoter issue per stirpes

1 Introduction

2 Freedom of testamentary disposition

3. The intestacy rules - overview

Comparison of English and Scottish Intestacy Laws