“All or nothing” gamble or putting in place the right will. Lessons from Mr and Mrs Scarle’s estates
The recent “all or nothing” dispute over the estates of James and Ann Scarle has highlighted problems that can arise in second marriage or ‘blended family’ situations. The gory facts of this English near simultaneous death succession case might have stolen the attention. But the case is more important than that and should be a wake-up call for many families and what can happen when proper planning is not undertaken.
Those gory details and what was at stake
The dispute arose between two step-sisters, Anna Winter and Deborah Cutler over a property worth £280,000 and savings of £18,000. Anna was the daughter of James Scarle and Deborah the daughter of Ann Scarle. The couple died from hypothermia at the property in Essex during October 2016. Anna Winter’s argument was that due to medical evidence of decomposition, her stepmother was on the balance of probabilities likely have to died first and that meant her father had inherited her stepmother’s share of the estate. Deborah Cutler’s position was that it could not be said for certain who passed away first and that because her mother was younger she should inherit due to a rule in the English Law of Property Act 1925. A rule stating that if it cannot be determined who has died first, it is to be presumed to have occurred in order of seniority, and accordingly the younger shall be deemed to have survived the elder.
Why it really mattered who died first in this case?
It mattered because as Mr Scarle had not made a will, his entire estate would pass to Mrs Scarle and Mrs Scarle’s entire estate, under her will, would pass to her daughter alone.
So, Mrs Scarle’s daughter, Deborah Cutler inherited the entire estate of her mother and stepfather. Mr Scarle’s daughter was accordingly disinherited. Presumably not what Mr Scarle (and perhaps also Mrs Scarle) had planned would happen. As it was put by a barrister in the case: this was an “all or nothing case for the parties who stood to inherit from their parents.” And it indeed was; as Anna Winter not only receives no inheritance but she must pay £150,000 of legal costs.
What would have happened in Scotland?
The children would have shared the estate (in the proportions owned by their parents). That is because the Succession (Scotland) Act 2016 changed the rules to say that where husband and wife die at the same time or it is not possible to determine who died first, then neither is presumed to have survived the other. The result, under Scots law, would then have been that Mr Scarle’s estate would not have passed to Mrs Scarle (as she would not have been treated as surviving) but instead to his daughter and Mrs Scarle’s estate (being only ‘her’ estate not the combined estate) would still have passed to her daughter.
So, if I am Scottish is there no need to worry or to take action? No. Absolutely not. The Scottish rules only help where it is unclear who survived the other. And the ownership of the estates is in the exact desired ultimate split. For families in Scotland in a non-Scarle- situation the default rules would not help ensure the estates got to the right beneficiaries. Only the right wills and the right estate planning advice gives that comfort. It is to that we now turn.
What ideally would have happened with good estate planning
James and Ann Scarle died without having wills that could effectively deal with their assets regardless of who died first. The appropriate wills for providing for children of different relationships are, in Scotland, most important where we do not have unusual situation of an uncertain order of death. In other words, important in almost all cases. This could offer much needed financial security now that their respective stars have waned.
The Scarles could have made wills which ensured that their respective child would be treated irrespective of who died first. It would not be “all or nothing” based on the chance order of death. A will including important trust provisions could have helped achieve the ‘right’ result. With the ‘right’ trustees being guided by an appropriate accompanying letter of wishes, the Scarles’ wills could have ensured the survivor was provided for while protecting both ‘sides’ of the next generation. This is the best will structure for ‘blended family’ scenarios.
It is also worth remembering that a will (or the laws of intestacy) is not always the end of the story. Where a house is the main asset in the estate, it is important to check the title position and in particular the existence of a “survivorship destination”. A survivorship destination trumps a will and, via the title deeds, passes the house to the survivor – who can then decide under their will who inherits. In a position like the Scarles, we would recommend removing any survivorship destination in order that the wills alone determine who inherits and help control treating the next generation fairly irrespective of the order of death.
Gory facts… simple message
The Scarles unusual and gory factual background highlights issues that are very much more everyday and apply to a large number of families in Scotland. Put the right kind of will in place and don’t gamble.