The land of Scotland and the common good: report

Section 6 - Succession Law

6.1 Status of Land

1 In Scots law, there are two types of property, immoveable and moveable. Immoveable property is 'land' (and that which is attached to it) and still commonly called heritable property in Scotland. ^[1] Everything else other than heritable property is considered moveable property.

2 In this Section, the Review Group examines the long standing issue over the continuing different treatment of land in comparison to other property in Scotland's laws of succession (or inheritance). This distinction does not occur in other European countries and can be traced back to the introduction of feudal tenure in Scotland over 900 years ago. Since that period, the laws of succession to land have been a key issue for those owning the land, in order that their heirs and descendants retained control over all of the land held.

3 The arrangements, which were put in place to ensure that continued control of landed estates, included a distinction between land and other types of property, with the succession to land being governed by the law of primogeniture ^[2] and other measures that were developed, such as entailment. ^[3] Remarkably, both these measures have only ended in the last 50 years, with primogeniture in relation to land finally abolished in 19644 and the last vestiges of entailment ended as part of the Abolition of Feudal Tenure etc (Scotland) Act 2000.

4 However, the feudal difference between land and other property still survives as part of Scotland's laws of succession. The remaining distinction is important in a situation where a deceased person's testament (or will) bequeaths their estate in a manner that disinherits ( i.e. omits) certain close family members. Whilst a deceased person's children and spouse (or civil partner) have indefeasible rights in the moveable estate, known as legal rights, no such rights exist in relation to heritable property.

5 In considering why this distinction still exists, the Group reviewed the long history of recommendations to remove this distinction between heritable and moveable property in succession law. This has included several reports over recent decades by the Scottish Law Commission. A feature of this history is the influence in preventing the removal of the distinction by what is generally described in the reports as agricultural and landed interests.

6.2 Before Devolution

6 In Scotland up until 1868, land could still not be bequeathed in a will, as land continued to pass to the next generation under the law of primogeniture. The Titles to Land Consolidation (Scotland) Act 1868 then introduced the freedom to bequeath land to whomsoever one wished. However, in the event that a land owner left no will, the law of primogeniture continued to apply to the land.

7 In the 1920s, three legal committees recommended that Scotland's law of succession should be reformed so that, like systems of succession in other European countries, there was no law of primogeniture, no preference of males over females, a system of legal rights and no distinction between immovable and moveable property in intestate succession. ^[5] These features were then also recommended by the Committee of Inquiry into the Law of Succession in Scotland (the MacKintosh Committee) in 1951. The Committee acknowledged, however, the representations received from landed interests that the proposals would be "detrimental to the interests of agriculture and landed interests" and in its recommendations, the Committee made "special proposals for the safeguarding of such interests". ^[6]

8 The MacKintosh Committee recommendations formed the basis of the Succession (Scotland) Act 1964, which abolished primogeniture and made some improvements in the position of spouses and children. However, the Act did not remove the distinction between heritable and moveable property, except with regard to the marital home. This Act as amended continues to govern the legal position today and thus spouses and issue have legal rights to a share of moveable property, but still not of heritable property.

9 The law of succession continued to be an issue after the 1964 Act. In the 1980s, the Scottish Law Commission ( SLC) therefore re-examined the topic and in 1990, published a 'Report on Succession'. ^[7] The report considered whether the legal right of children to a fixed share of their parent's estate should continue to be limited to moveable property under the 1964 Act, or whether the distinction between moveable and heritable property should be removed.

10 The SLC noted that strong representations were made to them on this by the Scottish Landowners Federation. However, the SLC argued that " We do not believe, however, that the answer to their concerns is to retain the distinction between heritage and moveables for the purposes of legal shares. The results of this distinction are often arbitrary and unprincipled even in the case of farms and landed estates. If the deceased owned land as an individual it is heritable property in his estate. If he owned shares in a company which owns the land, the shares are moveable property in his estate". ^[8] The SLC did however, include a proposal to enable executors to pay legal shares for agricultural land over a longer period. Despite this and continued calls from the SLC for progress on its Report on Succession, there had been no progress by the time of devolution.

6.3 Since Devolution

11 Succession was one of the topics included in the SLC's Seventh Programme of Law Reform in 2005, with the SLC highlighting that their 1990 Report had not been implemented and " Yet the defects we previously identified still exist". ^[9] They also indicated that the obstacle to progress had been opposition to the proposal to remove the immoveable/moveable distinction in the legal rights of children, and implied they would reconsider this.

12 The SLC produced a Discussion Paper on Succession in 2007 and then published its Report on Succession in 2009. ^{[10] [11]} In this report the SLC stated " It is a fundamental tenet of our proposals that legal shares for both the deceased's surviving spouse or civil partner and the deceased's issue should be from the whole of the deceased's estate, heritable as well as moveable". While the SLC acknowledged the continuing concerns of agricultural and landed interests over this and considered those concerns in some detail, they concluded, " that our proposals will not, in practice, have any serious detrimental effect on the farming and landed estate sector. ^[12] Therefore we recommend that:

• Businesses, including agricultural farms and estates, should not be excluded from claims for legal share". ^[13]

13 Following publication of the SLC Report on Succession, the Scottish Government Minister Fergus Ewing made a statement in July 2009 welcoming it. However, he also noted that " In considering this further, we will want to take account of the fact that farming and landowning communities have on-going concerns about legal shares for children coming out of the whole estate". ^[14] In December 2009, the Minister also added in relation to the SLC's Report, " The intention now is to engage with stakeholders, through a programme of dialogue and formal consultation". ^[15]

14 That intention remains the position five years later. At present ( i.e. April 2014), the Scottish Government website states, " The Scottish Government is giving consideration to the SLC's report" and the Review Group's understanding is that there are no current plans to take matters forward.

6.4 Current Position

15 In considering the debate about Scotland's laws of succession over the last 50 years since the limited reforms of the 1964 Act, it appears clear that 'agricultural and landed interests' have successfully opposed a broad consensus across other interests in society to end the distinction between heritable and moveable property. The issue, as the SLC and others have set out, is about the continuing disinheritance of spouses (or civil partners) and issue (children) from what is considered their just entitlement, as judged by society's contemporary values. They have argued that there is no justification for continuing to treat land differently from all other forms of property in succession law. The Review Group agrees.

16 The Group considers that, while this issue involves land, the driving need for removing the remaining distinction between heritable and moveable property, should be a straightforward matter of social justice based on the current disadvantaged position of spouses and children.

17 Some have considered that ending this special protection for landed property in succession, might also encourage a reduction in Scotland's concentrated pattern of rural land ownership. While the potential effect is unclear, the Review Group does not consider that the change would have a significant influence on that pattern. The long running debate means that over the decades, many 'agricultural and landed interests' have adopted defensive positions against the possibility of the change. This is particularly the case with the larger landed estates and the ownership of much of rural Scotland is now held by companies and trusts, which are immortal land owners as far as succession law is concerned. The concern expressed in the submission to the Review Group by Scottish Land and Estates (as the main body representing the interests of rural land owners in Scotland), was not about large estates but rather that " an extension of the protection from dis-inheritance to include heritable property would adversely affect the smaller family farm". ^[16]

18 The end of the special treatment of land in Scotland's succession laws might still be considered to have some symbolic significance as a land reform issue, despite limited impact on Scotland's concentrated pattern of large private estates. The change would finally end the longstanding link between land ownership and succession law in Scotland. The abolition of feudal tenure removed the defining character of a feudal system (superiors and vassals) and the special treatment of land in succession law, which is another distinctive relic of that feudal system, should also be abolished.

19 The Review Group considers that the arrangements to follow the abolition of the distinction between immoveable and moveable property in succession law, should be based straightforwardly on giving children, spouses and civil partners appropriate legal rights over both forms of property.

20 The Review Group recommends that the Scottish Government should, in the interests of social justice, develop proposals in consultation with the Scottish Law Commission for legislation to end the distinction between immoveable and moveable property in Scotland's laws of succession.