Wills and succession planning: certainty in times of uncertainty? Kelso : Rennie Welch

Wills and succession planning: certainty in times of uncertainty?

Wills provide a structure to manage the next generation’s succession to what could amount to significant assets, in particular family businesses and land interests. Having succession arrangements reviewed and brought up to date can provide peace of mind in times of uncertainty. 

The certainty provided by that structure requires a number of factors to be considered as part of the Will preparation process, with areas of risk addressed or mitigated through the appropriate drafting. 

Implementation: the charge to executors

Leaving aside changes to asset values or the viability of a business as a result of the economy more generally, the allocation of particular assets and/or business interests on death requires the right people to be charged with implementing that allocation. 

Executors are appointed under a Will to deal with the administration of the estate, obtaining Confirmation in Scotland or Probate in England and Wales and completing the necessary inheritance tax reporting, and then implementing the beneficial terms of the Will. Where the Will provides any degree of discretion as to implementation, or even where there is likely to be a need for discussion around the sale of important family assets as part of the estate administration process, the choice of executors can be pivotal to moving the administration forward smoothly, while maintaining family relationships. 

Executors have legal duties to act in the best interests of the beneficiaries, and whilst there is no rule against beneficiaries also being appointed as executors, the appointment of beneficiaries as executors should be carefully considered. 

Executors act as a body, and there should be confidence in that body being able to carry out the Will provisions effectively.

Competing claims: legal rights

In Scotland, certain family members under a Will have rights to limited claims against the value of the estate on death, notwithstanding the terms of the Will itself. These “legal rights” apply to spouses and children, and if claimed require the claimant to forfeit any provision made in their favour under the Will. 

This legal concept can be particularly relevant where there is a principal successor to a business or land interest, and the value of that interest makes up a large proportion of the value of the estate. How should potential legal rights claimants be provided for, or how can potential claims be managed financially whilst still achieving the overall succession objective? 

The practical implementation of that succession objective should be considered as part of the drafting of the Will, and although values can and do change over time, the options for dealing with potential legal rights claims should be considered as part of the succession planning arrangements. 

Conclusion

Certainty in terms of succession cannot be absolute. Good succession planning is about having the right structures in place, with the right people involved in managing those structures. Considered drafting is key, as is scope to adapt and manage implementation as circumstances change. All of these will help to achieve the desired outcome. 

Sign-up to the RW blog

Invaluable accountancy and tax insights delivered straight to your inbox!

Share this article

Kelso Office
Academy House,
Shedden Park Road,
Kelso,
Roxburghshire,
TD5 7AL
Melrose Office
West End House,
High Street,
Melrose,
TD6 9RU
Berwick Office
Halidon House,
17D Windmill Way West,
Ramparts Business Park,
Berwick-upon-Tweed
TD15 1TB

We use cookies on this website, you can find more information about cookies here.
© 2021 Rennie Welch. All rights reserved.