Barbara and Kenneth might be having time of their lives in the colourful and seemingly perfect world of Barbie Land, having just picked up their keys for their ‘DreamHouse’. However, they are about to get a reality check as they take the plunge into the Real World.
If you’re about to buy your ‘DreamHouse’ or have just got the keys to your new home, it’s understandable you don’t want to think about death or disaster, and it is easy to think everything will be rosy. But whether you're buying your first flat or have worked your way up the ladder to your dream home in the West End, it’s a long-term (and major) financial commitment.
Scotland has rigid laws about who inherits your property if you die intestate (i.e. without a Will), and these can have difficult consequences for those you leave behind.
Cohabitees are especially vulnerable because they don’t have automatic rights to inherit property (unlike spouses and civil partners). While cohabitees can go to court to claim a share of the property, there are also limits to what the courts can award, and there is no guarantee of receiving anything at all. There’s also a very strict time limit of 6 months.
Couples who cohabit don’t have the same automatic inheritance rights as spouses and civil partners. For most couples, their property is their most valuable asset, and their main concern is what will happen to it when they die. What happens to your home if one of you dies depends on what your title deeds say.
Let’s say Barbara and Kenneth move into a flat together. They’re not married and neither has made a Will.
SCENARIO 1:
Barbara, with her string of successful careers, has savings and buys the flat herself. If she dies before Kenneth, he’s left in a precarious position because he doesn’t own any share of the flat. If Barbara wants Kenneth to inherit the flat, she should make a Will leaving it to him.
SCENARIO 2:
Barbara and Kenneth buy the flat together and put in the title deeds that it’s owned by them and ‘the survivor of them’. This is known as a ‘survivorship destination’ and means that if one dies, the survivor inherits their share automatically. This might be what the couple want, but it is important to ensure that any change in circumstances are kept under review to avoid unintended consequences.
SCENARIO 3:
Barbara and Kenneth own the property jointly, and both are on the title deeds, but don’t have a survivorship destination. If one dies without a Will, their share goes to their family. The other would have to buy the family out, persuade the family to let them carry on living there, go to court to make a cohabitee’s claim or sell up. Again, this is a precarious position and could be avoided by having a Will.
This list isn’t exhaustive, and also isn’t hypothetical – these situations happen to real people every day. Barbara and Kenneth may rather open a celebratory bottle than discuss Wills and death. But these conversations – along with what would happen if they split up – are important. Whilst these conversations are never going to be comfortable, the discomfort could turn out to be far greater, and far more expensive, if you don’t have the discussion in the first place and take advice on the relatively simple solutions to protect you and your loved ones. So why not put it on the long to-do list along with your other home-buying admin?
We would be happy to advise you on the best options for your circumstances, please do get in contact with our Private Client team.
This article was published on 19 July 2023.