Heather llott case and proposed reforms to succession in Scotland The recent decision by the Court of Appeal in the Heather Ilott case has caused quite a stir in England where it attracted widespread coverage in the media. Justice Arden awarded Mrs Ilott £164,000 from her mother Melita Jackson’s £500,000 estate, setting aside Mrs Jackson’s expressly stated testamentary instructions that her daughter not receive a penny following her death and instead the whole should be split between three animal charities. The decision was made on the grounds that Mrs Jackson did not leave reasonable financial provision for her daughter. This is a break from decisions in the past where orders for financial provision were generally made to disinherited children only if they could show they were still dependant on the parent. This could be due to a disability or because they were still a minor at the time of death, for example. While Mrs Ilott had lived on or near the poverty line for most of her life, it would be hard to argue she was dependant on her mother as they had been estranged for almost thirty years. Nevertheless the decision was made that it would be reasonable for Mrs Ilott to receive financial provision from the estate with her current reliance on benefits and a lack of a pension noted as important factors when coming to the ruling. Mrs Jackson did not have much of a connection with the charities to which she left the money and this was also raised by LJ Arden as a reason to set aside the will. Interestingly, that Mrs Jackson had been “unreasonable, capricious and harsh”, in LJ Arden’s opinion, did not factor into the decision and neither did the fact that the estate was partly made up of money inherited from Mrs Ilott’s father. That Mrs Jackson was not allowed to completely disinherit her daughter is not something that would raise many eyebrows if it happened in Scotland. From LJ Arden’s judgement we can surmise that had Mrs Ilott not been in such dire financial straits the courts would have held up her mother’s will and left her with nothing from the estate. In Scotland, however, it has long been established that children, collectively, have a “legal right” to part of their parent’s estate no matter their own situation. Be that as it may, this “legal right” does not provide complete protection to children from being disinherited. The rules in Scotland make a distinction between heritable estate – mainly land and buildings – and moveable estate – pretty much anything else, such as money in bank accounts or shares. The legal right afforded to children entitles them to a half of the moveable estate if there is no surviving spouse or a third if there is. This means that in a hypothetical estate made up of a £300,000 house and no moveable property, a child of the deceased could receive nothing if the testators will states that the house is to go to someone else. This may be all about to change in Scotland, however, as the Scottish Government has recently published a consultation proposing significant reform to succession law. The need for reform has been mooted for a number of years with the Scottish Law Commission (SLC) compiling reports from as far back as 1990 and more recently in 2009, with the government consultation largely drawing from the 2009 report. One of the key changes recommended by both the SLC and now the government is to do away with the distinction between heritable and moveable property. This
in theory would provide even greater protection from disinheritance should the current system be retained but the consultation also advises replacing legal rights with one of two options. The first option put forward is a fixed share of the deceased estate both heritable and moveable. The consultation suggests 25% of what the child would have got if the deceased died intestate (without leaving a will) as a suitable “legal share”. The consultation also recommends replacing the current, somewhat complex rules regarding the distribution of estates for which a will has not been left. Briefly put, the proposed new rules on intestacy would mean that if someone died without a will and was survived by a child but no spouse then the child would claim the whole estate and likewise for a surviving spouse where there is no children. If there is both a surviving spouse and child then the spouse will inherit the entire estate up to a threshold figure (£300,000 has been suggested but this would be frequently reviewed) with the remaining estate split in two – one half going to the spouse and the other half divided between any children. The near unanimously agreed upon policy of allowing the surviving spouse to remain in the family home is the reason for having a threshold figure but it would seem that the consequence of this system would be to create a societal divergence in rights. Essentially only children whose parents have an estate worth more than the threshold figure would be entitled to a legal share and those without (the vast majority of the population) could be effectively disinherited. Of course, as we have seen in the case of Mrs Ilott, not everyone agrees that it is a problem if adult children can be disinherited. The second option proposed by the consultation is considerably more radical and would seem to be a move closer to the English way of doing things. This option would do away with the legal right of adult children and instead bring in a system whereby only dependant children could claim a capital sum from the estate based on their maintenance needs until they reach an age where no aliment is due. While this would protect those who need it most, concerns have been raised about the uncertainty of such a discretionary system. Should it be left for the courts to calculate what the dependant child is due, will they be consistent? There are also fears that the time and cost of making an application to the court (consider that Mrs Ilott’s case has been going on for over ten years) could create discord within families. Clearly the issue of disinheriting children is not a simple one and the legislature’s job is to find the right balance between an individual’s freedom to test and protecting family from unfair disinheritance. Perhaps a mix of the two options proposed by the consultation which provides a minimum protection for all children while providing a stronger protection for dependant children could be a suitable compromise. This may, however, end up running counter to the objective of having a simple and easily understood succession structure. In the more immediate future the Succession (Scotland) Bill is currently making its way through parliament. This brings in some functional, yet significant, changes proposed by the 2009 report including the automatic revocation of testamentary provisions to former spouses following divorce. With these changes looming it will be more important than ever to review your will and make plans for your estate. If you need any advice please contact Mitchells Roberton Solicitors Bruce Battersby by email on bruce@mitchells-roberton.co.uk or by phoning 0141 552 3422.