From 1 February 2012 new rules came into force which changed the maximum amounts that an individual can expect to receive when their spouse or civil partner (for ease of reference, “spouse”) dies without a will.

What happens when your spouse dies without making a will?

When a person dies in Scotland without making a will they are said to be intestate. This means that their estate has to be divided up according to a rigid and rather mechanical process which was set down in statute in the mid-1960s. This procedure governs the order in which the deceased’s estate is distributed amongst their family – and can sometimes provide some surprising results.

The spouse is the first in line to inherit. Under the new limits, in the absence of a will, they will receive:

• The deceased’s share of the family home up to a maximum of £473,000.
• A share of the furniture up to a maximum of £29,000.
• Cash of up to either £50,000 or £89,000, depending upon whether or not the deceased had any children.

To the extent that any value remains in the estate, this is divided as follows:

• A further one-half or one-third of the deceased’s “moveable estate” (any property which is not land or buildings) to the surviving spouse, again depending upon whether or not the deceased had any children.
• The remainder of the estate will then be disposed of in a strict order which can result in the spouse receiving nothing else as they rank after the deceased’s children, parents and siblings.

Why have these financial limits been increased?

The Scottish Government’s intention in increasing these limits is to ensure that the value of the spouse’s rights keep up with inflation and increased property prices in recent years.

The limit on the value of the family home which the surviving spouse is able to inherit has increased by almost 60% on the previous figure. This should give the survivor a greater prospect of receiving full ownership of their home if it had been held in joint names or solely by the deceased. It also reduces the chance that the family home has to be sold to satisfy the rights of children and other family members to the estate on intestacy.

What effect do these changes have?

The increased amounts which spouses stand to receive could, in many cases, result in the estate going almost entirely to the spouse, effectively disinheriting any of the deceased’s children.

Is there a big risk for children of a previous marriage?

The situation of those with children from a previous marriage is particularly acute. Without a will, the entire estate could pass entirely to the current spouse which would, in due course, be inherited by the surviving spouse’s children. This could completely exclude any children from the deceased’s previous marriage from inheriting any part of their parent’s estate.

Should I make a will?

Yes. Whilst every case will depend on its own facts as to how an estate is divided up in the absence of a will, relying upon the rules of intestacy is almost never a good idea. Following the increase in the financial limits, however, a will can ensure that children from a previous marriage will receive something as apposed to possibly nothing if all the property is transferred to their parent’s new spouse under intestacy.

Also, there are lots of other sensible reasons for having a properly drafted will, such as ensuring piece of mind and that wealth passes tax-efficiently.

Further information

If you would like any more information on any of the issues raised in this update, please contact Alan Sharp, Partner.

This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.