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As published within the STEP Journal 

Magnus Mackay and Jaclyn Russell survey the landscape of succession law and cohabitant’s rights in Scotland and discuss the potential for reform

The succession rights of married and unmarried couples were brought into sharp focus last year when the Court of Appeal in England and Wales handed down its judgement in the case of Lancashire Teaching Hospitals NHS Foundation Trust & Others v Jacqueline Smith [2017] EWCA Civ 1916. With the Scottish Government considering significant reform of succession law, the present arrangements, proposals for change and the potential impact of the case are of significant interest to Scottish practitioners.

Lancashire heard an appeal by Ms Smith who had been unable to claim statutory bereavement damages following the death of her long-term partner because the entitlements only applied to spouses.  The court concluded that where a state provides a benefit (in this case, the right of spouses to claim statutory bereavement damages in England and Wales) it must be able to justify the denial of these rights to certain other parties.   In particular, where damages could be claimed by a spouse, but not by a cohabitant, the court considered that the denial of these rights to a cohabitant breached the prohibition of discrimination contained in Article 14 of the Human Rights Act 1998.  While the court could not grant damages to the claimant who raised the action, the view clearly expressed was that the matter should be rectified by Parliament in a change to the law.  The implication was that where a law provides spouses with rights against their deceased partner’s estate, those rights should generally be equally available to cohabitants.

The Human Rights aspect of the case is particularly important in Scotland, as s29 of the Scotland Act 1998 requires all legislation passed by the Holyrood Parliament to comply with the Human Rights Act.

The current law in Scotland

The rights of cohabitants in Scotland following a death are presently contained in s29 of the Family Law (Scotland) Act 2006.  Currently a cohabitant has the right to apply to the court for a share of the deceased’s estate, but only in the absence of a Will.  While spouses of persons who die domiciled in Scotland are entitled to a share of the estate regardless of the terms of a Will, cohabitants can only make a claim on intestacy.  For a claim to be successful, the deceased must have been domiciled in Scotland at the time of their death and cohabitation must have been continuing at the time of the death.  Cohabitants whose relationship ended shortly before the death may not be able to claim.  By contrast, spouses who were separated but not actually divorced are still entitled to a share of the estate unless an appropriate separation agreement is in place.

If the deceased left no Will and the relationship had not ended before the death, a partner must then demonstrate that he or she is indeed a cohabitant. S25 of the 2006 Act defines a cohabitant as “a man or a woman who are (or were) living together as if they were husband and wife; or two persons of the same sex who are (or were) living together as if they were civil partners”.  Factors to be taken into account in determining a claimant’s status are (i) the length of the period the couple were together, (ii) the nature of their relationship during that period and (iii) the nature and extent of any financial arrangements existing during that period.

If a claim is admitted to court, the amount of the claim is determined in accordance with sections 29(2) and (3) of the Act.  The court may order payment of a cash sum to the cohabitant from the deceased’s net estate (being the estate after payment of Inheritance tax, debts and other liabilities and the claims of any surviving spouse), or the transfer of assets.

When considering the amount of a claim, the court must take into account the size and nature of the estate and any benefit already received by the claimant as a result of the death (for example, the proceeds of a life policy).   In all cases, s29(4) specifies that the award must not exceed the entitlements that a surviving spouse would have received.  There is no minimum award and a claimant may end up with relatively little from an estate. 

Where a person is survived by both a spouse and a cohabitant, the cohabitant’s claims are ranked second to those of a spouse, meaning that a surviving spouse’s entitlements must be deducted before the value of a cohabitant’s claim can be considered.  The present law therefore largely favours a spouse or civil partner over a cohabitant and for estates where a spouse or civil partner’s entitlements exhaust the estate, there would be no assets left for a cohabitant to claim against.

One other significant hurdle (which cohabitants may too easily fall foul of) is that an application to the court must be made within 6 months of the day on which the death occurred.  There is no mechanism for the court to extend this deadline.  By contrast, spouses’ entitlements are fixed by the Succession (Scotland) Act 1964 and can be the subject of a claim for up to 20 years after the death.   These entitle a surviving spouse to a minimum of a one-third or one-half share of the moveable estate after payment of debts and liabilities.  In addition, on intestacy a spouse is also generally entitled to a share of the matrimonial home, its contents up to a certain value and a fixed cash sum.

Proposals for reform

Changes to aspects of Scottish succession law were considered in a Consultation Paper issued by the Scottish Government in 2015, largely backing proposals originally set out by the Scottish Law Commission in its report of 2009.  Key areas identified for reform were the intestacy rules, the level of protection from disinheritance available to children and protection for cohabitants.

Among the main criticisms of cohabitant’s rights were the lack of guidance given to a court on the purpose of the award, it not being clear whether the award should take into account the likely future needs of the claimant, or purely a reflection of the contribution made to the relationship during the deceased’s lifetime.  The potential for conflict between the interests of the deceased’s children and the cohabitant was also recognised, since any amount awarded to a cohabitant would reduce the amount passing to children.  

The Commission also sought to more clearly define a cohabitant, allowing the court to take into consideration (a) whether the couple were members of the same household; (b), the stability of the relationship; (c) whether or not there was a sexual relationship; (d) whether or not there were any children of the relationship, or children accepted as children of the family and (e) the external perception of the couple, i.e. whether the outside world viewed the couple as married or cohabiting.

Generally, the Commission recommended that the existing provisions for cohabitants should be repealed and replaced and for claims to be available in testate cases as well as on intestacy. If introduced, this would represent a significant change and one which would treat a cohabitant in a similar way to a spouse.  The court’s broad discretion on the level of the award would be replaced by a percentage of what a surviving spouse or civil partner would have been entitled to, with the court deciding the precise percentage that would be appropriate, taking into account the length of the relationship, the financial dependence of the couple on each other and the cohabitant’s contribution to the relationship, whether financial or non-financial.

The restriction denying a cohabitant a greater share than a spouse would have been entitled to would remain intact, but in the case of a surviving spouse and a cohabitant, a cohabitant’s claim would be deducted from a spouse’s entitlements so as to ensure that assets were available to meet both claims.

In Summary

The proposals for reform do appear to go some way towards equalising the succession rights of spouses, civil partners and cohabitants in Scotland, but until such time as changes are introduced, advisers should ensure that appropriately drafted Wills are in place for cohabiting couples to enable their wishes to be given effect.  However, in view of the Human Rights considerations in the Lancashire case it may only be a matter of time before cohabitant’s rights become a matter of legislative necessity rather than policy.

Jaclyn Russell TEP is a Partner and Magnus Mackay TEP is a Senior Associate in the Private Client team at Stronachs

Chambers UK 2018

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