Common Challenges in Probate and Executry

6 Common Challenges in Probate and Executry in Scotland

In Scotland, the probate and executry process presents significant challenges that can complicate estate administration. Understanding these issues in advance can help you prepare for what could potentially lie ahead.

1. Will validity

Challenging the validity of a will can create substantial delays in estate administration. Common grounds for contesting a will in Scotland include:

• Lack of testamentary capacity: The testator (the person making the will) lacked mental capacity and subsequently did not understand the nature or consequence of making the will at the time of signing.

• Undue influence: The testator was influenced by someone they trusted to change their will against their wishes.

• Facility and circumvention: When someone in a position of trust took advantage of the testator’s physical or mental frailties (but not lacking mental capacity) to sway the will in their favour.

• Fraud: When someone deliberately falsifies a will, such as forging the testator’s wishes and signature or presenting a fake document.

• Lack of formal validity: For a will to be valid in Scotland, it must follow a specific legal framework; if not, there may be grounds to challenge its validity.

2. Executor disputes and removal issues

Disputes between executors and/or between executors and beneficiaries are becoming increasingly common. These conflicts often arise when:

• Executors fail to carry out their duties properly.

• There is a disagreement about investment and/or estate administration decisions.

• There is a disagreement over beneficiaries’ entitlements (e.g., inheritance disputes).

• Personal interests conflict with executor duties.

• There is suspicion of mismanaged estate assets.

Sometimes, it is necessary to remove an executor from their responsibility of managing the deceased’s estate. If the executor resigns voluntarily, this can be done administratively via a Declinature or Deed of Resignation.

If not, an interested party may apply to the Sheriff Court or the Court of Session to enforce a removal order. There are only two ways an executor can be removed from their duties through the courts:

1. Section 23 of the Trusts (Scotland) Act 1921: This allows an interested party to apply to the court to have an executor removed due to insanity, incapacity, absence from the UK, or if the executor is missing for six months or longer.

2. Nobile officium petition: This is done through the Court of Session as a last resort. This means the court will only use its power to make a decision when no other legal remedy is viable/available.

3. Estate debts and liability management

Whether the deceased person or the courts appointed an executor of the will, these individuals face significant challenges in identifying, valuing, and managing estate assets, debts, and liabilities. This includes:

• Creating an “inventory” list of the deceased’s estate at the time of death.

• Obtaining details of investments, shares, personal belongings, jewellery, and property values.

• Sourcing the deceased’s bank accounts, life policies, and/or business-related information.

• Identifying debts and liabilities such as mortgages, funeral costs, and council tax.

• Dealing with various types of debts: individual, jointly owned, secured, unsecured, and undisclosed.

• Formally notifying creditors (domestic and foreign), HMRC and the DWP about the loved one’s death, especially if they received a pension and/or state benefits (e.g., Child Support).

• Paying inheritance tax (IHT) to HMRC within six months of the deceased’s death before distributing assets to beneficiaries. This is done on an IHT400 form. Additionally, executors may need to handle capital gains tax (CGT) and income tax up to the date of the deceased’s death.

• Formally file for sequestration (bankruptcy) if the liabilities of the estate exceed the assets of the estate.

This is even more challenging if the deceased person died without a will. This is something known as intestate succession or dying intestate in Scotland, which we’ll cover in detail further down.

4. Grant of Confirmation complexities

Once the deceased’s executors have managed the above, they must formally apply for a Grant of Confirmation at the local Sheriff Court in the area where the deceased last lived. This gives the executor legal authority to manage the estate, handle debts and liabilities, and distribute assets as per the testator’s wishes.

However, the confirmation application process can be more difficult in Scotland compared to other jurisdictions.

Confirmation for small estates (valued at £36,000 or less) can be applied for at the local Sheriff Court. They will assist you in this regard and obtain Confirmation for free. Large estates (valued over £36,000) typically need independent legal advice due to the complexity of winding up the estate.

Applications must be accompanied by a C1 “inventory” form that tallies up the deceased’s entire estate (property, personal possessions, investments, stocks, cash, furniture, etc.).The initial valuation must be as accurate as possible, as inaccurate calculations can lead to legal complications.

A Bond of Caution (a type of insurance/financial guarantee) must be provided for intestate estates.

If Inheritance Tax is payable, Executors must request HMRC IHT tax code from HMRC when applying for Confirmation in Scotland. This reference number is given to executors (or their agents) and is listed on the IHT400 forms mentioned above. HMRC will then provide an authorisation code when they have processed the IHT400 forms. This is listed on the C1 form mentioned above and will allow the courts to provide a Grant of Confirmation.

5. Legal Rights claims

In Scotland, surviving spouses/civil partners and children (or, in certain circumstances, the issue of children) have automatic legal rights to a fixed share of the deceased’s net moveable estate, such as money, shares, cars, and jewellery. This applies in all cases where there is a Will, and all intestate cases where there are children (or, in certain circumstances, the issue of children), unless there is a spouse or civil partner who inherit the entire intestate estate by virtue of their Prior Rights.

• Executors have a duty to advise potential claimants of their legal entitlements.

• Legal Rights must be calculated correctly, in a specific order, and be distributed before other adult beneficiary claims.

• Disputes can arise over the value of the moveable estate.

• Blended families or those who feel they have been unintentionally disinherited from a will can also make a claim.

Failure to properly handle this legal process can result in personal liability for the executor.

6. Intestate estates

When someone dies without a valid Will, contentious probate is a common occurrence. This situation creates an additional layer of complexity that can complicate estate administration.

• Executor dative: When there is no Will, the court must appoint an executor to manage the estate, referred to as an executor dative in Scots Law. This involves interested parties (usually next of kin) petitioning the Sheriff Court for appointment, which can be challenging and time-consuming.

• Intestacy distribution: Scotland has strict legal rules governing how assets are distributed when there is no Will. Once assets have been accounted for, the estate is divided into a specific order of inheritance: Prior Rights (owed to the spouse or civil partner), Legal Rights (spouse or civil partner and/or children or issue of predeceasing children), and Free Estate. There is a hierarchy when it comes to succession to the Free Estate that is governed by section 2 of the 1964 Succession (Scotland) Act as amended.

• Bond of Caution requirements: A Bond of Caution is a form of insurance designed to protect beneficiaries from incorrect management and distribution of the intestate estate by the Executor Dative. As such, all C1 applications must be accompanied by a Bond of Caution, except when the Executor Dative is the spouse or civil partner of the deceased and they inherit the entire intestate estate via their Prior Rights. This is a recognition of the fact that it would be absurd to insist that someone seek insurance against themselves for their own actions.

• Family disputes: Tensions often surface when family members believe they’re entitled to certain assets. Unfortunately, with intestate estates, assets are divided according to a strict order of inheritance, as mentioned above. This can result in some family members, whom the deceased may have intended to provide for, receiving nothing.

Now that you have a better understanding of some of the most common challenges in probate and executory, let’s discuss how you can avoid contentious probate with the help of Jones Whyte.