Is it necessary to have a Scottish Will?
The purpose of a will is to communicate your wishes as to what will happen to your personal possessions after you die. It is a written legal document setting out the people you would like to inherit specified parts of your estate.
It is recommended that most people make a will so that they may specify who they want to inherit their estate and to avoid the complicated intestacy procedures necessary where there is no will.
The laws in relation to wills and inheritance in Scotland are very different to those in the jurisdiction of England and Wales. If you have assets in both Scotland and England, these differences will need to be carefully considered when you are preparing a will whether in England or in Scotland.
Scottish law does recognise a will that has been validly prepared in England and therefore Scottish assets could be dealt with together with your English assets under a carefully drafted English will. However, in certain circumstances it is recommended to make a separate Scottish will dealing with your Scottish assets. You should always consult a specialist lawyer to advise you as to what is best for you in your individual circumstances.
You will however need to ensure that separate wills do not conflict or revoke one another and that they work together to achieve the intended result. You should therefore ensure that any lawyer you instruct to prepare a will whether in Scotland or in England are aware of the contents of any other will that you have.
Who will inherit my Scottish Assets?
Under English law anyone making a will has “testamentary freedom” which means that you can choose whoever you want to inherit your estate and in whatever proportions as long as you set this out in a valid will.
Scottish law has a system of forced heirship known as Legal Rights, which means that under Scottish law certain portions of a person’s estate must be left to particular relatives and this can not be overridden by their will.
However provided you are not domiciled in Scotland when you die Scottish law will not apply and the beneficiaries named in your will should inherit your estate.
Will there be inheritance tax to pay?
This will depend on a number of factors and your personal circumstances.
As a general rule, if you are “domiciled” in the UK at the date of your death your estate will be liable to UK inheritance tax (IHT).
IHT is charged in the UK at 40%, however, everyone is entitled to a tax free amount (also known as the “nil rate band”) which is currently £325,000 (or up to £650,000 for married couples and registered civil partners if the “transferrable nil rate band” applies). This means that the combined value of your worldwide estate is calculated and only the amount that is over the tax free amount will be taxed at 40%. The tax is paid from the assets in the estate before they are distributed to the beneficiaries.
The question of whether or not a person is domiciled in a particular country for inheritance tax purposes is an extremely complex one. You should always obtain expert legal advice to ensure you understand how this will be dealt with on your death so that you can obtain the intended results for your beneficiaries.
Your “worldwide estate” includes the value of your assets in England, Scotland and any assets that you may have in any other country. It may also include certain gifts that you have made within the last 7 years.
There may be some exemptions or reliefs available in respect of the amount of IHT payable depending on who your beneficiaries are and the nature of your assets. Your lawyer will be able to advise you as to what would be applicable in your circumstances.
Succession tax planning is extremely important if you want to ensure your beneficiaries get to keep as much of their inheritance as possible. Professional advice and careful planning can often make a significant difference to the amount of tax payable. You should always ensure that you get proper specialist advice in relation to your individual circumstances. Your lawyer can discuss inheritance tax planning with you as part of the preparation of your will.