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Fergusson Law shares their latest news, the latest legal news and provides some legal advice on this blog.

Intestacy For Buy To Let Investors

buy to let properties and intestacy

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:

Buy to let properties

  • 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.

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Inheritance Tax Lessons from the Great and Good

Six common sense and legal ways to pay less tax; all used by well-known people (and for you too).

  1. Ronnie Corbett sold his large family home and gave the proceeds to his children. Since he lived on for a full seven years after the gifts there was no IHT to pay. Even not surviving the whole seven years would have saved some tax.
  2. Tony Wedgwood Benn’s family all agreed to vary his wife’s will after her death. ‘Deeds of variation’ are common ways of a family agreeing the legacies of a will in the most tax beneficial way.
  3. Jim Slater invested heavily in shares listed on the London Alternative Market which are exempt from IHT. Although a specialist area of investment there are many well established companies on this Market . Take specialist advice.
  4. Rik Mayall was an unfortunate example.  He made no Will at all which not only led to more tax being paid than necessary but also to distant relatives getting unintended windfalls.  
  5. Peter Ustinov left more than one Will in different countries because he had assets overseas. The resulting confusion absorbed over £10m of his assets in legal fees.   
  6. Denis Healey's estate (the late Labour chancellor 'squeeze the rich until the pips squeak') has saved £75,000 by donating his correspondence to an Oxford library. Are your papers of national importance?

Any of these ring a bell with you? Talk to us now.

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Buy-to-Let investor? Who will inherit your properties?

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.

After your spouse (probably) gets the family home any other houses and land you own (including your buy-to-let properties), and all the cash remaining may go to relatives (Laughing Heirs) whom you have never met.   

Laughing Heir is taken from the German ‘der lachende Erbe’ referring to heirs whose relationship to the deceased is so distant they suffer no sense of bereavement but are happy to receive an unexpected financial windfall

Download our Information Sheet Intestacy, read this article, No Will leads to family disputes,  or call us now on 0131 556 4044

If there is no Will, and no heirs that can be found, the Scottish Government will get these assets. 

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