Children have Legal Rights too

Scots law says you can’t disinherit your children. This isn’t quite as simple as is seems and there are a number of “ifs” “ands” and “buts” you need to think about when dealing with a child’s entitlement to inherit a part of their parent’s estate. The law in Scotland sets out how the rights of spouses, civil partners and children to share in the estate of their parents are protected.

Legal Rights in Scotland are an automatic entitlement enjoyed by the surviving spouse or civil partner AND any children (including adopted and illegitimate children). This can come as something of a surprise to those making a Will!

This article considers the rights of the children.

This area of the law can be fairly compled and this article will give you a brief overview of the position. For a more detailed discussion, please contact us and arrange an appointment.

Children's Legal Rights

Children enjoy Legal Rights to the estate of their parent whether their parent leaves a Will or not. There is no need for the child to apply to the court to secure these rights. Legal Rights apply to the moveable estate (cash, shares, cars, jewellery etc.) of the parent only – not to what is known as heritable property (generally land and buildings).

There are also two scenarios that apply. The first is when the parent dies leaving no Will and the second is where the parent has made a Will.

Where there is no Will

Where the parent dies without leaving a Will, before Legal Rights can be considered, any spouse or civil partner is entitled to what are called Prior Rights. Prior Rights dictate that the surviving spouse is entitled to:

  • the family home (up to a certain value – currently £473,000)
  • the furniture in that home (up to a certain value – currently £29,000), and
  • a cash sum of money (again, up to a certain value – currently £50,000 if there are children, £89,000 of there are no children).

If the value of the estate is within the current limits for Prior Rights, then the entire estate will be exhausted by these and there will be nothing left for Legal Rights.

If there is moveable estate left after the Prior rights have been exhausted, it will be divided as follows:

  • The spouse or civil partner is entitled to receive one third of the remaining estate,
  • Any child or children are entitled to receive one third of the remaining estate divided equally amongst them

After satisfaction of the Legal Rights, in is example, any child or children are entitled to the remainder of the estate irrespective if it is made up of heritable or moveable property.

You should also be aware that if a child has died before their parent and that child had children, those children are entitled to their parent’s share in their grandparents estate equally between or amongst them.

If there is no spouse or civil partner, then the entire estate goes to any child or children equally amongst them.

Where there is a Will

It is, perhaps, helpful to take a step back to when the Will is prepared to understand the application of Legal Rights when there is a Will.

The granter of the Will should always remember when preparing the Will that:

  • if you have no children –

your spouse or civil partner is entitled to one half of your moveable estate, or,

  • if you have children but your spouse or civil partner has predeceased you –

your children are entitled to one half of your moveable estate, or

  • if you do have children –

your spouse or civil partner is entitled to one third of your moveable estate and your child or children is or are entitled to one third of your moveable estate.

Remember that this relates to the automatic rights to your moveable estate and not your heritable estate.

However, when one of the above categories of beneficiary makes a claim for Legal Rights, they forego any provision made for them in the Will – they cannot seek to have both benefits.

There is a very helpful article on the Scottish Government Web site on Rights of Succession (but please ignore the figures quoted because these are now out of date!).

We hope this article has given you an understanding into the complexity some of the things solicitors need to take into account when advising clients on preparing their Wills or in winding up an Estate in an Executry Case. This is a very brief overview of the law as it currently stands.

Contact our experienced Private Client Solicitors

For specific guidance on your own situation, we will be pleased to provide help and advice. Call us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).


Divorce or Separation – what’s the best way forward?

Many marriages, civil partnerships and other cohabitation arrangements end in separation, and in the case of marriage, divorce. Trying to reach a resolution of the issues between the parties can be extremely difficult. In a high number of cases, solicitors will be instructed to help achieve this resolution.

It’s not all court proceedings and “he said this and she said that”! There are a number of options available to “manage” how the parties can achieve a resolution. In this article we’ll look at these options.

Each party has rights on separation or divorce and some of these conflict. Once a client has been advised of those rights, they may take a very different stance from that taken before they sought legal advice. Solicitors will give clients advice based on the law.

Solicitors don’t make decisions for clients and only take actions based on discussion with and instructions given by the client.

When parties separate, they have various options available to resolve issues between them. Those issues are likely to involve children, money and assets. The different needs of the parties will impact on the shape of any resolution.

When parties separate, their first instinct is to protect their position. They normally seek advice about this from a solicitor. At the first point of contact with a solicitor, the options available to resolve the issues should be set out. The main options are Solicitor Negotiation, Collaborative Practice, Mediation, Arbitration or Litigation.

Solicitor Negotiation

Until recently, this was the most common form of resolution. Each party would instruct his or her own solicitor. After receiving instructions, one solicitor writes to the other party’s solicitor setting out the client’s position and seeks information about the other party’s position. The other party’s solicitor takes instructions and then replies setting out the other party’s view. This is then explained to the client and further instructions are sought. This process and exchange of letters repeats itself until an agreement is reached between the parties. The terms of the agreement are set out in a Minute of Agreement once an agreement in principle has been reached. Both parties sign the Minute of Agreement. That agreement sets out the arrangements between the parties and is binding on both parties. If an agreement cannot be reached, the next option is usually litigation.

There are, however, three alternative methods of reaching an agreement between the parties that can lead to a quicker and, perhaps, cheaper and more equitable settlement – Collaborative Practice, Mediation or Arbitration.

Collaborative Practice

Again, each party will have his or her own solicitor. In this case they will sign up to a collaboration agreement committing themselves to settle the issues between them without resorting to the courts.

Both parties and their solicitors will be present at meetings. The parties will set out and discuss the issues between them, look for solutions to the problems facing them and attempt to reach an agreement across all these issues. If further information is needed, third parties can be asked to attend and supply information or give advice to the parties in the meeting – a common instance of this would be specialist financial advice.

Outwith the meetings, each of the parties will be advised separately by their solicitors. What takes place in the collaborative process is confidential with the exception of any financial information which may be used outwith the process.

Once an agreement is reached between the parties, it is then reflected in a Minute of Agreement that then becomes binding on the parties.

If matters cannot be resolved and one of the parties decides to seek a resolution through litigation, then the solicitors involved in the collaboration cannot then represent the parties in the court proceedings.

Mediation

Mediation is another alternative means of resolving issues between the parties. Again, whilst each party will have his or her own solicitor, they agree to appoint a Family Mediator to mediate arrangements between them. The Mediator doesn’t represent either of the parties but seeks to work with the parties to resolve the issues between them and to help them reach agreement on what should be done. This normally involves a series of meetings with the parties. The Mediator will provide a summary of the mediation and when it is successful, a Minute of Agreement can be prepared reflecting what’s been agreed in the Mediation. This will be binding on the parties. As in the collaborative process, confidentiality is preserved except in relation to financial information which can be used outwith the process.

Arbitration

This is perhaps the latest of the alternative dispute resolution options available to the parties. Arbitration can be used where there is an issue of principle between the parties that cannot be otherwise resolved using Collaborative Practice of Mediation. Examples of this might be what the relevant date of separation is, how much maintenance should be paid, what the matrimonial assets are worth or the resolution of specific matters in relation to the children. These are just some examples of the types of things that can be decided by arbitration.

The parties, assisted by their solicitor and, sometimes, the arbiter, set out the scope of the arbitration and put that into an Agreement to Arbitrate. The arbitration process and timescales are agreed. For instance, are there to be only written submissions or oral submissions and/or evidence or both?

Once the arbiter has made a decision, it is then binding on the parties as agreed in the Agreement to Arbitrate.

Collaborative Practice and Mediation have the parties at the heart of the whole process with the focus on the best outcome for all involved. Arbitration tends to focus on specific issues in dispute between the parties. These methods of dispute resolution can also provide solutions that would not otherwise be available to the courts if the parties had to resort to litigation.

There are obviously circumstances where Collaborative Practice, Mediation and Arbitration are inappropriate, for instance, where there are concerns about the welfare or security of the children or where there is an element of domestic violence, and the only options available are solicitor negotiation or litigation.

Litigation

Finally, if all else fails, the parties can resort to the courts who will then hear the facts and circumstances and impose a ruling that it binding on both parties. Litigation can be lengthy and expensive and, sometimes, delivers a resolution that neither party is happy with.

Contact our experienced family lawyers

If you find yourself in the unfortunate position of separating from your spouse or partner and require our help, call us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew)


Thinking about selling? Now’s the time

We have seen a very different, vastly improved property market for sellers this year. Many of our clients have been surprised at just how good a result we’ve managed to achieve for them.

It is all about supply and demand. The market is underpinned right now by a good demand amongst buyers, this is certainly helped, amongst other things, by the cheap mortgage lending available. However, this is set against an insufficient supply of new properties being made available for sale. Demand is growing, but the supply is not keeping pace.

Clearly this is good for sellers. This year we have been seeing shorter sale times, frequent closing dates off the back of multiple viewings and, as a result, sometimes surprisingly good sale prices. This is especially true for family size homes. So, if you are thinking about moving, now could be the perfect time.

There is no better example of this than our recent marketing of 13, 15, 18 Kemp Avenue, 11 Methuen Road and 50 Clydesdale Avenue in Paisley. These properties are all within 500 yards of each other and are all of a similar type and value. We brought these properties to the market over the last few weeks, but they are all sold now.

What is striking is that none of the properties were on the market for longer than two weeks. In fact, Number 18 Kemp Avenue lasted only two days. Numbers 13 and 15 Kemp Avenue sold at closing dates with multiple offers above valuation. It goes to show, even with multiple properties coming to market in a concentrated location around the same time, the demand is still there for them to be snapped up.

There are still buyers who missed out on these properties. We are working with them now to help them find another home.

The bottom line is this: we are currently experiencing a high demand for family homes. We have serious buyers actively looking for property. We are confident that they would pay a premium price for the right property.

Contact one of our experienced staff today

So, if you are thinking about selling contact one of our experienced staff today to arrange a free valuation on 0141 886 5678. We are offering competitive fee packages for any newsletter enquiries.


The Apprentice…..well, Trainee Solicitor, actually

In this article, Anna Brown talks about her experience of working with Walker Laird as a new Trainee Solicitor. Anna is no stranger to our News having previously reflected on her work experience with Walker Laird. You can read that article by clicking here. Her first taste of the firm certainly didn’t put her off and now she’s a Trainee Solicitor going through her qualification to become a fully-fledged lawyer. Here’s what she has to say about the whole experience so far:

After completing two weeks’ work experience at Walker Laird in July 2015, I was very lucky to be kept on as a part-time member of staff. I was employed to help out in the office with various duties - mail, reception cover, scanning, taking deliveries, filing, doing legal research etc. I then progressed into the Civil Department, where I worked as a Legal Secretary whilst studying. I graduated from the University of Edinburgh with an LLB in June 2016, and have completed my Diploma in Legal Practice at Strathclyde University. I have now been fortunate enough to have been offered a two-year specialised training contract in the Civil Department in Walker Laird.

Legal Studies And Progression

Studying on the Diploma alongside working part time in Walker Laird was very useful as one complemented the other. I started the Diploma course with a good basic understanding of how the legal profession operates in practice, which is something you would not know from the undergrad LLB course alone. This has been hugely beneficial for me. Even the simple tasks expected from the Diploma, such as creating a paper file, are a mystery to many others on the course as they have not had the privilege of being involved in a legal office.  On the other side of things, the Diploma gave me a greater understanding of the process of various legal transactions which I would not have been able to learn in a busy workplace. I can therefore apply this knowledge when working on various tasks at work.

I have now started my traineeship at Walker Laird. I have been a trainee for just over a month now. The experience I have gained from working in Walker Laird for almost two years before starting is experience I could never have gained from a classroom, and has been the most helpful over the past month. The support from my colleagues has been overwhelming, and they have reassured me that they will continue to help me every step along the way. I already knew the way in which the solicitors and staff in my department operate and so I know what is expected of me.

My role now includes a wider variety of duties and more responsibility. I am now largely involved with preparing for Court throughout the week, in particular for Paisley Sheriff Court on Friday’s. The Friday court deals with Summary Cause, Small Claims, and the new Simple Procedure cases. The Simple Procedure in a new court procedure and will soon replace small claims. This was something I was taught at University, and something I could bring to the team when I started. I am also a lot more involved in dealing with our Family Law cases, meeting with clients, liaising with other solicitors, drafting letters, and administration duties for court. I have also worked closely alongside my colleague Michael Wilson who specialises in Personal Injury in assisting him in preparing for Personal Injury cases that have litigated.  My roles and responsibilities will only continue to grow, but I feel the training I am getting has me prepared for every new challenge that comes my way.

I feel in the past month I have had such a hands-on experience and have learned so much already. Every day I learn something new. The size and nature of Walker Laird is going to allow me to have a specialised, intense traineeship with the greatest support around me. Working closely alongside three solicitors, in the Civil Litigation department on a day to day basis, is a traineeship that is rare to come around.  I personally am very grateful for this opportunity. I am only at the beginning of my traineeship, and have a vast amount to learn but it is such a rewarding experience to see all the hard work over the past five years paying off. Most importantly, I am thoroughly enjoying my traineeship, and working for Walker Laird. I would not have chosen to start my career in any other way and I am excited to see what the future has in store for me.


Kirklandneuk Primary School WOW’s Walker Laird with their Artwork

Kirklandneuk Primary School recently took part in their World of Work (WOW) Week, an initiative to help inspire pupils about their future and the opportunities available to them through the success stories told by local businesses. Ronnie McGinlay (Partner), Pamela Evans (Estate Agent Negotiator) and Hazel McGinlay (Business Development Manager) at Walker Laird had a fantastic visit to the school, meeting staff and chatting with the pupils and it was encouraging to see such enthusiasm amongst the children regarding their career aspirations.

Art Competition

 

We also set the pupils across the whole Primary School a task to help ignite their creative flair and design two pictures: a lion design for P1-3’s and an Estate Agency “for sale” board for P4-7’s. The children were shown examples of the Estate Agency boards that are currently used and a photograph of the Walker Laird Lion, “A Lion for all Seasons” for some inspiration. The Walker Laird Lion was bought at auction in the Pride of Paisley event where the proceedings were split evenly between ACCORD Hospice and St Vincent’s Hospice. The lion resides loud and proud at our office in Paisley.

 

Walker Laird would like to thank all the children for taking part in the competition. It was great looking through everyone’s drawings and seeing the effort that was put into every design.

 

Massive congratulations to our 4 winners.

 

Lion Design ‘Harry’ – by Harry Troubridge (P1)

 

Lion Design ‘Suny’ – by Jessica Cooley (P3)

 

Estate Agency Design – Clark Gentles (P7)

 

Estate Agency Design – Lucy Dunn (P5)

 

We hope that you all liked your certificates and enjoy using your voucher for Soar at Intu Braehead. The winner’s drawings are displayed in both our Paisley and Renfrew Office windows, on our website and Facebook page.

 

Well done again to everyone who took part!


Inheritance Tax – Residence Nil Rate Band

A new Inheritance Tax allowance comes into force on 6th April 2017. This will apply to property left to direct descendants. The Residence Nil Rate Band, as the new relief is called, means that from this year, a new tax free allowance will apply to a property left by a deceased person to a descendent. If there is more than one property in the estate, the executor can decide which property is to be allocated for this purpose.

This allowance starts at £100,000 and will rise in £25,000 blocks over the next 4 years until, in the tax year 2020/21, it will stand at £175,000. If the property is held in joint names of a married couple or civil partners, each of the parties enjoys this relief - and it’s transferrable from one to the other on death if it’s not been used up.

Here are the basic rules. The Residence Nil Rate Band will apply if the:

  • individual dies on or after 6 April 2017
  • individual owns a home, or a share of one, so that it’s included in their estate
  • individual’s direct descendants such as children or grandchildren inherit the home, or a share of it, and
  • The value of the estate isn’t more than £2 million

Direct descendants include, the children, grandchildren and further lineal descendants of the deceased. They also include the spouse or civil partner of a direct descendant. Also included are step children, adopted children, fostered children and children of whom the deceased was guardian.  You can find an outline of what are considered to be descendants on the HMRC website. You can click here to view this information.

Direct descendants don’t include nephews, nieces, siblings and other relatives who aren’t included in the list above.

The Residence Nil Rate Band is in addition to the current Inheritance Tax (Nil Rate Band) threshold of £325,000. This is also transferrable between spouses or civil partners if it is not exhausted on death.

The total Inheritance Tax allowances available to married couples and civil partners from the tax year 2020/21, will be £1 million – and after that the allowances will increase in line with inflation (as measured by the Consumer Price Index).

There are a number of helpful case studies on the HMRC website ranging from the most simple and straight forward to the very complicated. You can view those case studies by clicking here.

Interestingly, if one spouse or civil partner dies before April 2017(whether or not they owned a share of the property or had already passed a share to children), the survivor will be able to use both of their family home allowances when he or she dies.

If you have a Will, you need to make sure it’s up to date so that you can take advantage of this tax-free allowance. If you don’t have a Will, you need to make one now to ensure you can decide who will benefit from this allowance.

Inheritance Tax planning is a complex process and we recommend this be undertaken by an expert in this field.

Get In Touch

Contact us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).


Helping your children get on the property ladder

The bank of mum and dad is a cliché that’s well worked in today’s economic times, not least when it comes to helping children to get a leg up onto the property ladder. Rising property prices and lenders restricting the level of borrowing has meant that younger people have found it increasingly difficult to bridge the gap between the amount they are able to borrow and the price they have to pay for the property.

Many parents and grandparents who have the financial wherewithal to help need to consider very carefully how to go about providing any sort of assistance to their children or grandchildren.

The option of helping with the deposit without any expectation of this being repaid is straightforward – it’s a simple gift from one to the other.

However, if the plan is to provide a home for the child, then there are potential difficulties that need to be addressed before embarking on such a scheme.

If the title to the property is to be taken in the name of the child, then the child can subsequently do what he or she wants with that property. The child can borrow money and use the property as security or sell the property and keep the proceeds of that sale.

If the child were to run into financial trouble and be pursued by creditors to the point he or she becomes bankrupt, that is likely to lead to the property being sold to meet the debts the child has run up.

Should the child be married and the marriage fail, it is likely that there will be a claim by the spouse for a share in the value of the property.

You should also be aware that if the child is under the age of 16, even though they take the title in their own name, the purchase will be considered as a purchase of an additional dwelling and the rules relating to the Additional Dwelling Supplement will apply. The Additional Dwelling Supplement is a tax of 3% of the purchase price of the property (if the property is purchased for more than £40,000) that is charged when someone buys a property in addition to their current main residence - and is payable in addition to any Land & Buildings Transaction Tax (in England and Wales, Stamp Duty) that may already apply.

Parents and grandparents must think through the options very carefully before embarking on any such scheme.

So, what are the options to secure the position for the parents and grandparents?

There is always the option of buying the property either with or without a loan and then allowing the child to live in it. This would mean that the property would always belong to the parents or grandparents and when it is eventually disposed of, it is likely that Capital Gains Tax will need to be paid on any gain achieved on that sale. If the parents or grandparents already own their own home, there is also the added cost of the Additional Dwelling Supplement.

If the parent holding title to the property were to die, then the property will form part of the estate – and there may be other siblings who are entitled to share in the estate and that might mean that the property must be sold to satisfy that entitlement. Even this method of helping has its problems!

As an option, to try to at least secure the money invested in the property, the parent or grandparent might decide to secure their interest by taking a Standard Security over the property. If this is done, it’s usually backed up by an Agreement setting out in what circumstances any money secured should be repaid. That’s fine as far as it goes because even if there is a problem and the property has to be disposed of, then the money paid to buy it (and potentially any notional interest payable on that money as might be provided for in an agreement) would need to be repaid – but the parent or grandparent might not be able to share in any profit on the sale. If the property is in the child’s name, then the same problems can arise regarding bankruptcy or divorce as mentioned above, but of course, the security would go some way to protect the money invested!

One option that has been getting more attention in recent times is the creation of a trust. The basic methodology is that a trust is created with the parents or grandparents as trustees and the child as a beneficiary. The property is then purchased by the trust with money put into the trust by the parents and/or grandparents. The trust then becomes the owner of the property. The child can live in the property and be sheltered from the vagaries of divorce, separation or bankruptcy as none of these events could have an effect on the ownership of the property – it’s owned by the trust!

The trust can sell the property and buy another property and allow the child to live in it and it can ultimately transfer the property to the child or dispose of it and pass the free proceeds of that sale to the child.

There are also taxation implications that will need to be addressed. The Additional Dwelling Supplement we discussed above will apply to a purchase of this nature if the parents or grandparents who created the trust own their own homes. On disposal,

Capital Gains Tax may apply. It is beyond the scope of this article to enter into a detailed discussion of when Capital Gains Tax will apply so for further information on that we would direct you to the Government website dealing with this topic. You can access that by clicking here. One important point to note is that the money paid into the trust to enable the trust to purchase the property, no longer forms part of the parent’s estate and, as such, is sheltered from Inheritance Tax. Again, to ensure that this is done correctly, you need to take proper legal advice on this.

Contact Us

If you find yourself in such a situation or are currently considering your options, we’d be happy to speak to you about this. Please call us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).


Business Rates and what you need to know about the 2017 revaluation

This year will see a revaluation of business rates. Revaluations like this happen every five years. The Scottish Assessors conduct a revaluation exercise to determine the rateable value of public and private non-domestic property. This revaluation was supposed to have taken place in 2015 but was postponed until this year.

Will you be affected by the revaluation?

Even small changes to your rateable value could affect your eligibility for or disqualify you from rate relief so it is important to find out if the rateable value of your property has gone up or down relative to the national average. Businesses in an area or in a sector doing well should expect their rateable values to increase and firms in less successful areas should expect a decrease.

What to do if you think you have been valued incorrectly?

You could have grounds to appeal if you believe that your value is incorrect. If you think this is the case, you should contact your local Assessor to discuss this. However, you may require professional assistance from your solicitor or other property professional. Formal appeals against revised valuations can only be made between 1 April 2017 and 30 September 2017. Councils can grant discretionary relief to businesses in the local area although only in exceptional circumstances. Other reliefs and assistance may be available to small businesses including Rural Relief and Enterprise Zone Relief but again only in special circumstances. You can find out more information about this help here.

You can check the current rateable value of your non-domestic property at The Scottish Assessor Association’s website.


A Day Out At The Races

As we begin to look back over 2015, we cannot thank our staff enough for all the hard work that they do over the year. Some of the Walker Laird team enjoyed a well-deserved day out at the Tennent’s RaceDay at Ayr Racecourse on October 31st.

Our team enjoyed several races throughout the day with horses Cornborough and Island Heights taking home big wins! The entertainment and hospitality were also second to none and a fantastic day was had by all.

Looking To The Future

We look forward to organising another outing to the races in 2016!

 

 


Walker Laird At The Business Lunch

We are delighted to be attending The Prince and Princess of Wales Hospice Business Lunch this Friday, an annual and much-anticipated event on the Scottish Business calendar.

The Glasgow City Chambers will host an afternoon of both business and pleasure, with the opportunity to meet others and network while supporting Glasgow’s hospice.

Chartered Accountants, Campbell Dallas are enthusiastic supporters of the hospice and have been for 16 years. This year, they return as the main sponsor for the event.

Guests And Supporters

The work of the hospice focuses on providing the best quality of life for those living with life-limiting illnesses and offering support for their families, whether that be at home, in hospital or in the hospice itself. As a business, we are proud to support the hospice and look forward to an afternoon of celebrating the work that they do.

Each year, the lunch hosts a guest speaker and we are excited to hear from this year’s speaker, The Rt Hon Brian Wilson, Executive Chairman of Harris Tweed Hebrides, followed by what we are sure will be an exceptional meal.