It often comes as a surprise that just because someone has prepared a Will and set out who ought to inherit from their estate, there might be parties who have an entitlement and that they need to be paid before anyone else.
It can come as a real shock to executors that this is the case and that they have a duty to inform those people of their entitlement.
For those who have been left out of a will, if they are unable to challenge the terms of a will (see [link] here[/link]), they can look at ensuring they receive their legal rights entitlement in full.
It is not open to just anyone to seek payment from an estate, legal rights are restricted to:
• Any spouse or civil partner of the deceased
• Any child of the deceased
• Any grandchild of the deceased if their parent died first
Legal rights are calculated as a percentage share of the net “moveable property” held at the date of death. Essentially, this is everything excluding land and buildings, and after certain debts and expenses are deducted.
Although legal rights can seem straightforward at first glance, disputes frequently arise, as the law in this area continues to evolve through the courts.
Our team includes SJ Macdonald, author of “A Practical Guide to Legal Rights in Scotland”, and we are expertly placed to assist with these matters.
Our expertise with legal rights
What assets are included
All of a deceased’s “moveable property” is to be included in the legal rights pot. However, disputes can arise as to who owned the asset and whether it ought to be included (e.g. with joint bank accounts or other joint assets), or where heritable property is in the process of being sold or there is an instruction to sell in a Will, which can convert it to moveable for these purposes.
Other problems arise with determining whether an asset is moveable in nature or not. Farms and partnerships cause particular problems because there is a general rule that any land or buildings owned by a partnership will lose that status because what is owned is an interest in a partnership, not a share of property, albeit this can potentially be displaced.
There can also be assets that were gifted or transferred to a trust, but can still be brought within the net if the gift/transfer was not properly executed, or where the deceased continued to benefit from it.
All of these issues result in what can be protracted negotiations on what is to be included or excluded from a legal rights calculation. We can support you through these issues whether you are looking to maximise your entitlement, or if you are acting for the estate and trying to maximise the estate for other beneficiaries.
What value is attributed to assets?
Generally speaking, it will always be the date of death value that applies, however, with certain assets it can be incredibly difficult to estimate a value, and it is not until it is later sold that discrepancies come to light. Valuation is particularly difficult with partnerships, or with companies where the deceased had a minority holding and the true value of the interest can be hard to quantify. We can advise on options for agreeing a value with other parties or pursuing a certain valuation more formally.
How are legal rights to be paid?
Legal rights are treated as a debt of the estate and must be paid after the other debts (e.g. funeral expenses and tax), but before any other beneficiary receives their entitlement. This can have the impact where assets need sold to fund legal rights, and it may restrict tax exemptions on the estate and trigger tax becoming due.
Where it may result in the sale of a business or cherished asset, there may be negotiations that can be explored between the parties to agree another means of payment. We are expertly placed to help in the negotiation process and in the drafting of complex settlement agreements taking into account tax and other implications.
What if a party has given up their legal rights?
Parties can discharge their legal rights (i.e. give up any entitlement to receive them), but it has to be clear and unequivocal, usually with the benefit of legal advice and with an understanding of what they are giving up.
If a discharge has been signed and it is ambiguous or has been done without the legal advice or knowledge of the sums, there can be situations where parties can still seek to be paid their entitlement. We can certainly review the circumstances of any document you might have been asked to sign and whether it could be set aside for you to still seek payment.
Remedies & Outcomes
Where the best route involves the courts, our lawyers understand the importance of guiding clients through the process step by step and ensuring that everything is thoroughly prepared. We have extensive experience in the Sheriff Court, Supreme Court, Court of Session, as well as before numerous Tribunals and Inquiries.
However, court is not the only remedy to these challenges. There is often a negotiation with the executor or trustee, and it may be that mediation is suggested to try to resolve matters without proceeding to Court where someone will inevitably lose out. Our team can discuss these options with you, and the risks of proceeding to court as matters progress.
Why choose our service for legal rights?
Our solicitors have a wealth of combined experience and expertise when it comes to advising on these difficult challenges and to helping people through the process whilst grieving.
Our specialist team is ranked tier 1 in the Legal 500 for Contentious Trust & Probate work and includes partners Scott Flannigan who won the Legal 500 Dispute Resolution Rising Star of the Year, 2023 and SJ Macdonald who is ranked as a Leading Individual in Private Wealth Disputes in Chambers & Partners.
Our expert team have various professional memberships, demonstrating their expertise, including the Society of Trust and Estate Practitioners (STEP), STEP Advanced Certificate in Trust Disputes, and law society accreditations.
Our expertise with will and trust disputes also extends to advising beneficiaries on removal of executors and other problems with executors/trustees, legal rights issues, varying trust powers, purposes of trustees, dealing with the validity of homemade wills, and other similar problems. To find out more about our wider wills and trust disputes services, please click here.
Speak to our legal rights solicitors today
To discuss your legal rights entitlement or a related dispute, please get in touch today.
Contact us on 0131 270 7700, visit our offices in Edinburgh, Glasgow, East Lothian, Shetland or Orkney, or fill in our enquiry form to request a call back.