Do you have a Will? If you die without one, your estate may not be distributed in the way you would have intended, and it might cause real problems for your family. The issue is of particular concern to buy-to-let investors, who own flats and houses in addition to their family home.
If you do not have a Will in Scotland, your estate is divided according to the rules of intestacy.
Firstly, if there is a surviving spouse they get PRIOR RIGHTS.
- The family home (if they live there) up to a value of £473,000
- Contents (if they live there) up to a value of £29,000
- Cash - £50,000 if there are children, £89,000 if there are none.
If there are moveable assets left after prior rights, LEGAL RIGHTS apply
These only apply to moveable assets – that is everything except houses, flats and land.
- Surviving spouse and children: spouse gets 1/3rd of moveable assets, children between them share 1/3rd of moveable assets. Final 1/3 of moveable assets goes into FREE ESTATE
- Surviving spouse only: s/he receives half net moveable assets. The other half to FREE ESTATE
- Surviving children only: they share half net moveable assets. The other half to FREE ESTATE
everything left over after Prior and Legal Rights falls into the FREE ESTATE
Therefore any other houses and land you own (including your buy-to-let properties), and all the cash etc. left from Rights will be distributed in the following strict order of succession:
- Your children come first
- If you have parents and siblings they share your free estate
- If you only have parents, they take your free estate
- If you have siblings, but no parents, they inherit (or their children if they have predeceased)
- If you have no children, parents or siblings your surviving spouse comes next
It then goes on to uncles/aunts and other more distant relatives. But the important point is that your wife or husband is very low on the list. Your nieces and nephews may have better rights to your free estate than your surviving spouse. If no-one can be found then the Government gets it.
If you are a buy to let investor with no Will your properties are likely to end up in your free estate. If you have children, they will inherit these properties in preference to your surviving spouse, even if they are very young at the time. This could result in an unnecessary inheritance tax bill and make the properties difficult to manage as young children do not have legal capacity. If you are married with no children, your parents, brothers and sisters, (or their children if they have died before you) will inherit your buy to let properties in preference to your husband or wife. If you have an unmarried partner, they have limited rights, which do not include the buy-to-let properties.
If that is not what you want the practical solution is to draw up a Will.
For further help and legal advice about this matter please do not hesitate to get in touch with one of the Solicitors at Fergusson Law.