Succession Planning and Legal Rights in Scotland

Effective Succession Planning in Scotland

The most effective way to approach succession planning in Scotland is by establishing a comprehensive will that clearly details the testator’s wishes. A well-constructed will provides control over how assets, business shares, or agricultural property are distributed to future generations. This approach also creates an opportunity for fair asset division among siblings, based on personal family circumstances, while integrating tax planning strategies.

The Challenge of Legal Rights in Scottish Succession Law

In Scotland, legal rights add a unique layer of complexity to estate planning. Legal rights are a form of forced heirship under Scottish law, giving a spouse and children an automatic entitlement to a portion of the estate, regardless of any will. However, beneficiaries cannot simultaneously claim their legal rights and inherit under the will. Unless these rights are waived, they remain in force for 20 years.

Legal rights apply only to the “moveable estate” of the deceased, which includes everything other than land and buildings, also known as heritable property. Moveable estate covers personal assets and interests in family businesses, such as shares or partnership stakes. Succession planning becomes more complex when land and buildings are owned by a family business rather than an individual, a common situation in Scottish farming families. In such cases, partnership agreements should clarify asset treatment, as legal rights often treat business-owned properties as moveable assets.

• If a spouse or children survive the deceased, they may claim half of the net moveable estate, divided equally among the children.
• If both a spouse and children survive, the spouse can claim one-third, with the children sharing in one-third.
• Any remaining estate assets are distributed according to the will or, if no will exists, under Scottish intestacy laws.
• Legal rights may be discharged during the testator’s lifetime or upon death, simplifying estate administration.

Why Legal Rights Impact Succession Planning in Scotland

A legal rights claim can sometimes undermine the intentions expressed in a will, potentially forcing executors to liquidate assets to cover the claim. This may disrupt a family business or create financial strains. In some cases, meeting legal rights claims can affect the ability of a business to continue operations. These claims can also heighten family conflicts during an already challenging time.