4 December 2018

No change to succession rights on land

Scottish Government confirmed no changes to Legal Rights claims, keeping the distinction between heritable and moveable property

In the last few months, the Scottish Government has confirmed that it does not intend to legislate to make land in Scotland subject to Legal Rights claims.  This is surely a welcome relief for Scottish landowners.

Under Scots Law, a surviving spouse, civil partner and children are entitled to certain Legal Rights when a person dies, whether they leave a Will or not.  These Legal Rights are intended to reflect the view that a person should not be able to dispose of his or her Estate entirely according to individual preferences, but should be bound to leave something to those with whom they had the closest ties. 

One fundamental point in relation to Legal Rights is that these are calculated as a proportion of the value of the deceased’s worldwide net moveable estate.  This is an important distinction for landowners, as land and the buildings situated on the land are not moveable property, but are rather referred to as “heritable” property.  This means that currently a landowner may leave land and buildings to any beneficiary they choose. 

The recent concern was that the distinction between moveable and heritable property would be removed, as had been proposed by the Scottish Law Commission and some reports on land reform.  If land had been reclassified as moveable property, this might have resulted in holdings being broken up on death, leaving their long-term viability in question.

The Scottish Government has now confirmed that it will not seek to remove the distinction between heritable and moveable property.  As such, land will remain as heritable property and will not form part of any Legal Rights claim, provided it is held by an individual.  Land that is held as part of a partnership or through a company may already form part of a Legal Rights claim, as all partnership assets are regarded as moveable property, as are shares in a company.  Further planning might be required in order to ensure that these assets don’t fall into a Legal Rights claim.