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

John Gorham, MBA, FCIB, FTII, TEP
The Royal Bank of Scotland plc

(From Issue 8,July 1999)

Return to Part I

 4. Intestacy rules - refinements

4.1 Administrative

By section 33 of the Administration of Estates Act 1925 (and for deaths on or after 1 January 1997), personal representatives hold any estate of an intestate on trust with power to sell it (previously there was a trust for sale). There are then directions to pay funeral, testamentary and administration expenses, debts and other liabilities and to set aside a fund for any pecuniary legacies bequeathed by will (i.e. in the event of partial intestacy). Section 33 may be displaced, e.g. by an express trust for sale in a will (on a partial intestacy).

Section 39 of the Administration of Estates Act 1925 gives personal representatives wide powers of management for estate administration.

Section 2 of the Executors (Scotland) Act 1900 gives to executors nominate (appointed by will) the statutory and common law powers and privileges of Scottish trustees and there is a similar provision in section 20 of the Succession (Scotland) Act 1964 for executors dative (equivalent to administrators in England).

4.2 The surviving spouse

Both jurisdictions require "spouses" to be legally married so that so-called common law spouses do not benefit under the intestacy rules themselves (they may benefit in England on intestacy following a claim under the Inheritance (Provision for Family and Dependants) Act 1975).

In England, intestate spouses who are judicially separated at the time of death are debarred from benefit.

In Scotland, the position is more complex and there is a disparity of treatment as between husband and wife. Where an intestate wife has obtained a separation decree before her death, her husband is deemed to have predeceased her in respect of property she acquired after the decree. Prior and legal rights still apply for the husband, on the other hand, in respect of property acquired by the wife before the decree.

In England, by contrast to Scotland, there is no specific right under the intestacy rules to entitlement to the deceased's interest in the matrimonial home. This assumes of course that the property was not held jointly (and that the entire benefit passed by survivorship to the widow or widower).

On the other hand, a surviving spouse may, under the English rules, elect to have the deceased's interest in a house in which she or he was living at the time of death appropriated in or towards her or his entitlements in the estate. The value is that at the time of appropriation.

There are also embellishments to the prior right of a surviving spouse to a dwellinghouse in Scotland. Where the value of the deceased's right exceeds £130,000 (and there is no special destination), the survivor is (as noted in 3.3) entitled to a sum of £130,000 rather than the property itself. A prior right does not exist in relation to a dwellinghouse which forms part of a property which the deceased tenanted.

Further, where the dwellinghouse forms part of a business undertaking of the intestate (for example a farm) and the value of the whole undertaking is likely to be substantially diminished if the dwellinghouse is disposed of separately, the survivor is entitled to a sum (up to £130,000) equal to the value of the deceased's interest.

There is no limit to the value of personal chattels which a spouse may receive under the English rules. There is such a limit for furniture and plenishings in Scotland (see section 3.3).

In England, a surviving spouse may stand to receive the income for life from half the residuary estate. She or he may elect to have the income entitlement redeemed for a capital sum under provisions in section 47A of the Administration of Estates Act 1925.

The rights of an English spouse are, since 1 January 1996, dependent on her or his surviving the deceased by at least 28 days. There is no equivalent in Scotland so that survivorship by any period is sufficient to benefit.

The normal "commorientes" rule in England (section 184 of the Law of Property Act 1925) deems, in circumstances which render the order of deaths uncertain, a younger person to survive an older one. This is displaced for intestate spouses so that, in effect, each spouse is regarded as having predeceased the other (to prevent the combined estates passing entirely to the relatives of the younger one should there be no issue).

The equivalent to "commorientes" in Scotland is known as "common calamity" (section 31(1) of the Succession (Scotland) Act 1964). There is also an exclusion of the normal rule on the intestacy (and, incidentally, testacy) of a spouse.

Partial intestacy can lead to complications. For deaths on or after 1 January 1996, a surviving spouse under the English rules does not have to bring into account, when computing the statutory legacy, the value of any benefits received under the will. In Scotland, by contrast, a "legacy" has to be set against a prior right of cash but not those to a dwellinghouse or furniture and plenishings. "Legacy" is widely defined for this purpose to cover benefits such special destinations and donationes mortis causa (calculated at the date of death).

Both sets of rules provide for interest to be paid on the fixed cash sums for spouses from the date of death to that of payment.

4.3 Class gifts

A feature of the English legislation is "statutory trusts" which are defined in section 47 of the Administration of Estates Act 1925. These apply to gifts to classes such as the issue of the intestate and the issue of other relatives.

The broad effect of the statutory trusts is to divide the fund equally among such of the members of the class who survive the intestate and attain eighteen years or marry under that age. Where, however, a primary member of the class fails to take a vested interest but leaves issue of his or her own, the issue take their parent's share "through all degrees, according to their stocks, in equal shares if more than one".

Hence, if an intestate leaves two adult children and minor grandchildren being children of a deceased child, the fund is divided into three with the intestate's children taking one-third each and the remaining one-third being held for the children of the deceased child.

The statutory power of advancement (in section 32 of the Trustee Act 1925) and the statutory provisions for maintenance and accumulation of income (in section 31 of the same Act) apply.

For deaths prior to 1996, lifetime "advancements" for the benefit of children (not issue or other relatives) had to be taken into account (at a valuation at the date of death) in calculating the shares of the respective children. The rule does not apply for subsequent deaths.

The effect of the Scottish rules in relation to the free estate is broadly equivalent although there are no "statutory trusts" as such. Sections 5 and 6 of the Succession (Scotland) Act 1964 provide for the infinite representation of a deceased beneficiary with division per capita among the primary members of the class and per stirpes among their issue. On the other hand, there is no contingency (such as attaining eighteen or marrying) other than survivorship of the intestate.

Persons over sixteen years in Scotland can give a valid receipt (compare eighteen years in England where applicable) although a receipt given between ages sixteen and eighteen can be set aside until the person reaches twenty-one if the transaction is deemed to be prejudicial. In practice, particular care is needed in relation to legal rights and the cautious view is to wait until age eighteen.

There is no requirement, with the free estate, for beneficiaries to bring into account lifetime advancements by the intestate. This contrasts of course with the doctrine of collation in relation to legal rights (see section 2.4). As legitim deals only with moveables, advancements of heritage are not affected by collation.

In both jurisdictions, relationships through illegitimacy and adoption now rank with legitimate ones. Similarly, relationships through the half-blood (i.e. sharing just one parent rather than two with the intestate or ancestor) stand to qualify although rank after relationships of the whole blood. Neither jurisdiction recognises, however, step relationships where there is the absence of a blood tie.

4.4 Entitlement to a grant of representation

In both countries, real estate as well as personal estate - or heritage as well as moveables - now devolves on the "personal representatives" (to adopt for convenience an English expression) of the deceased whether he or she dies testate or intestate. "Personal representatives" in England can mean "executors" (appointed by a testator) or "administrators" (appointed by the court, i.e. where there is no will or there is a will but the named executors are dead or unwilling or unable to act). In Scotland, the equivalents are "executors nominate" and "executors dative".

A personal representative in either England or Scotland needs a grant of representation - probate or letters of administration in England, confirmation in Scotland - to demonstrate his or her title to administer the assets in the estate. The procedure for obtaining a grant is broadly similar in both countries and, since the Administration of Estates Act 1971, a certificate of confirmation of a person who dies domiciled in Scotland is accepted in England and a grant of probate or letters of administration of a person who dies domiciled in England is accepted in Scotland without the need for re-sealing.

Jurisdiction over probate matters in England is vested in the Family Division of the High Court for non-contentious business and the Chancery Division for contentious business. The equivalent jurisdictions in Scotland are vested mainly in the Sheriffs Courts and Commissary Office in Edinburgh.

In the event of total intestacy, the orders of priority to a grant are substantially similar albeit they differ in detail.

In England, the order is:

· the children of the deceased and the issue of any child who died in the deceased's lifetime;

· the parents of the deceased;

· brothers and sisters of the whole blood (or issue of any who have predeceased);

· and so on according to the order of entitlement to the estate.

Any person who wants to take out a grant can only do so if he has a beneficial interest in the estate and has cleared off in the oath leading to the grant anyone higher in the order.

In Scotland, the order is broadly:

· the spouse exclusively if she or he inherits the whole intestate estate under prior rights but, otherwise, the spouse is entitled concurrently with persons in the next category;

· those who inherit the "free estate" (i.e. estate after debts, prior and legal rights of spouse).

5 Conflict of laws

5.1 Firstly, an international dimension exists as between England and Scotland - because of their distinct legal jurisdictions - as well as between each of those countries and more "distant" territories.

Secondly, for the purposes of the private international laws, it is necessary to classify assets into "movables" and "immovables" which concepts are reasonably similar (although not identical) to the classification into personal estate and real estate in England and moveables and heritage in Scotland. The author perceives the spelling of "moveables" includes the "e" as the fifth letter for Scottish domestic purposes but excludes it for other purposes.

Thirdly, both jurisdictions apply the law of their situation to immovables and the law of the owner's domicile to movables in matters of succession. The concept of "domicile" is similar for the two countries. Other jurisdictions may well have different rules so that they may not uphold devolution under English or Scottish domestic law in respect of movable (let alone immovable) assets within their territories.

Fourthly, it is useful to look at the conflicts rules separately for the Inheritance (Provision for Family and Dependants) Act 1975, legal rights and the intestacy rules themselves.

5.2 The Inheritance Act does not extend to Scotland in that it applies only to persons who die domiciled in England (section 1(1)). Hence, the Act cannot be invoked by the dependants of a deceased who died domiciled in Scotland even if he or she left assets, whether movable or immovable, in England.

Whether or not a Scottish court might be asked to consider a decision of an English court in relation to the Act is perhaps open to debate. If it was, the author likes to think the Scottish court would recognise a judgement on movables situated in Scotland but presumably it would not do so for immovables located there..He has not come across the point in practice!

5.3 Scottish law treats legal rights as rights of succession. They will be applied to movables wherever situated of a Scottish domiciliary (but not of course to immovables since 1964). Scots law will also recognise analogous rights of foreign domiciliaries over movables situated in Scotland but not over immovables situated there.

English courts will recognise legal rights of Scottish domiciliaries over English movables.

5.4 As to intestacy, the starting point is the general proposition of lex situs for immovables and lex domicilii for movables. The classification of rights into immovables or movables follows on from this.

Spouses in both jurisdictions have specific rights to furniture and other effects ("personal chattels" in England)and such assets are unquestionably movables.

Spouses in Scotland have prior rights in a dwellinghouse which is an immovable. However, the Scottish law is not likely to be recognised where the dwellinghouse is situated outside that jurisdiction, for example in England! Further, there are occasions when the prior right is a sum of money rather than heritage itself, for example where the value exceeds £130,000. It seems likely that such a sum would, in the circumstances, be classed as an immovable rather than a movable.

A spouse under the English rules is not entitled to the intestate's interest in a dwellinghouse but may have pre-emption rights to buy it. The author has not yet fathomed out whether such a right would be classed as an immovable or movable! It could be relevant to an English domiciliary who died resident in Scotland to the extent there was no prior right to the house.

Spouses in each country have rights to cash sums. In Scotland, the sum is met out of heritage and moveables in proportion to their relative values. For a person domiciled in Scotland, the sum is a charge on his heritage in Scotland and moveables wherever situated. For a non-Scottish domiciliary, only his Scottish heritage is affected and that bears the entire cash sum.

In England, property subject to intestacy normally forms part of one fund under section 33 of the Administration of Estates Act 1925 and the statutory legacy is payable out of that. There could conceivably be an issue, however, where the intestate owned foreign immovables and the other assets were insufficient to meet the legacy in full. The lex situs would presumably apply to the foreign immovables.

6. Law reform

6.1 The (English) Law Commission published a report "Distribution on Intestacy" in December 1989 and one of its recommendations was that a surviving spouse should, in all cases, receive the entire estate. This was controversial and has not been enacted.

In the event, various other recommendations - including ones on hotchpot, survivorship clauses and provision for unmarried co-habitees (under the Inheritance (Provision for Family and Dependants) Act 1975) - were enacted in the Law Reform (Succession) Act 1995.

As noted, the amounts of the surviving spouse's statutory legacy are revised from time to time by statutory instrument.

6.2 The Scottish Law Commission issued its "Report on Succession" in January 1990 which included proposals to reform the intestacy laws but, as yet, no legislation has resulted.

The author learned during a telephone conversation (in March 1999) with an official of the Scottish Office that reform of succession (including intestacy) would fall to the new Scottish parliament. However, since 1990, views on the proposals in the 1990 report had changed and it was difficult to predict the outcome of any future deliberations.

As noted, the amounts in respect of the surviving spouse's prior rights are revised from time to time by statutory instrument.

7. Concluding remarks

7.1 The challenge at this point is pull the comparison together. One way of doing so is to work an example by reference to each set of rules and the required skill becomes one of arithmetic rather than legal principles.

7.2 The facts of the example are:

H died intestate on 2 April 1999 leaving (at their values for probate or confirmation):

and is survived by his wife W and issue.

For simplicity, the savings figure is what remains after debts, funeral expenses and the costs of administration have been provided for and no IHT is payable.

W has savings in her sole name but there are no savings in the joint names.

Two scenarios are considered:

(1) the house is owned by H solely.

(2) the house is owned by H and W jointly and passes by survivorship

Division:

Notes:

1. in England (1), W can elect to buy the house.

2. in England (1) and (2), W can elect to redeem her life interest for a capital sum.

7.3 Whether the house is owned by the deceased intestate solely or by him and his spouse jointly has a significant impact in England but is neutral in Scotland (at least on the facts of this example). This neutrality in Scotland would appear to hold good even if the house was security for a loan - the surviving spouse would, in either scenario, be liable for repayment. The destination of any life assurance proceeds intended to finance repayment would depend on how the benefit of the policy was written and secured.

The position over a mortgage in England would vary with the circumstances. If the house was owned solely by the intestate, the loan would be a debt of the estate (and reduce the residue if the estate was sufficient to meet the statutory legacy in full). If the house was owned jointly, the spouse would be liable for the loan but, as in Scotland, the benefit of any life assurance would depend on the "arrangement" of the policy.

Ignoring a loan, the outcome would be different if the house was in H's sole name and, for Scottish H, situated in England and, for English H, situated in Scotland - because of the impact of the lex situs. Scottish W would be "worse off" - she loses her prior right to the house - whereas English W would be "better off" - she gains the prior right.

7.4 The author hopes that this essay gives some flavour of the main differences between the English and Scottish laws of intestacy. The differences are significant and are probably explained best by the separate ways in which the two jurisdictions have evolved over many centuries.

An implication of Scottish home rule is that any future convergence is even less likely than it was and, if it occurs, it will be by accident rather than design. That, however, is primarily for politicians, not lawyers and practitioners.

In the meantime, the soundest advice, north and south of the border, must surely be to make a will - taking account of the potential constraints of legal rights in Scotland and the Inheritance (Provision for Family and Dependants) Act 1975 in England.

 John Gorham MBA, FCIB, FTII, TEP

28 May 1999

© The Royal Bank of Scotland plc

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