Scots Law - disclaim inheritance?

BillKing

A question specific to Scots Law if anyone would be good enough to assist...

My mother sadly passed away in July. My brother & I are due half of her estate each.

I was sequestrated almost 2 years ago, and was discharged at the end of 2016. However, my trustee (I understand) must take any inheritance I receive for a period of 4 years following the date of my sequestration in December 2015.

My questions are:

1. Can I disclaim my inheritance by contacting the solicitor dealing with the estate? I would obviously rather my brother's family received whatever my mother left us.
2. Can I ask my brother to agree to have the distribution of the estate delayed until such times as the 4 year period of dealing with my trustee has elapsed?
3. Is there another option, or should I just pass the whole amount to the trustee without question?

Many thanks.

Owain_Moneysaver

As far as an inheritance is concerned, your entitlement to the money or property starts on the date the person died.

When a deceased estate is administered, a bankruptcy check on all beneficiaries should be carried out by the executors. If this does not happen for any reason, the Trustee may have the right to sue the executors for the amount lost to your creditors.

After a bankruptcy order has been made, you have a duty to declare any inheritance or windfall to the Trustee within 28 days. The Trustee then has a time limit of 42 days from the date they became aware of the inheritance, in which to make a claim on it in writing.

If the date of death was after your discharge from bankruptcy, the Trustee has no claim on your inheritance as the bankruptcy rules no longer apply, and even with an Income Payment Agreement (IPA) still in force, this will not affect your entitlement to the inheritance as a lump sum.

Should you decide to invest the money, the income earned from it needs to be declared as the Trustee may use it to increase the level of IPA repayments from that point on.

Summarised from Begbies Traynor (Central) LLP.

And also:

Your discharge does not affect your continuing duty to
co-operate with the permanent trustee but it does affect the
vesting of assets. For example, an inheritance received after
your discharge could not be claimed by the permanent
trustee and any contributions will cease. (But please note
paragraph 1 in the section on contributions and income, on
page 9, regarding the deferral of your discharge if contributions
have not been made when it was possible for you to do so).

From Accountant in Bankruptcy - Debtors Rights Page 13

You cannot simply disclaim the inheritance for sequestration purposes, and the solicitor (if he is the executor) will not let you. You cannot also simply delay payment until after the "4 year" period. If the Debtor Contribution Order which lasts 4 years is the same as the IPA mentioned above then the investment income earned from the lump sum is liable for payment to the Trustee, but not the lump sum itself.

You should get professional and individual advice from a Citizens Advice Bureau or a local authority money advice service (or, with the usual caveats about a commercial business that will expect fee income, an insolvency practitioner).

BillKing

Many thanks Owain

It would appear that the advice from Begbie Traynor is based on English law? I haven't seen anything that says I am able to keep the lump sum of an inheritance under Scots law.

The AIB Scotland link doesn't state categorically that I can/cannot, but does make the distinction that I am not liable for payment to the trustee of any inherited lump sums after 4 years.

I think the most confusing part here is that although I am discharged after 1 year, in Scotland it would seem that I am not actually discharged until after 4 years (in reality).

I think the only option open to me now is to delay the presentation of the will to a solicitor (with my brother's agreement) until after the 4 year period has elapsed. I was under the impression that I could discharge my interest in a will as I was discharged from sequestration (1 year +), but it appears that this may not be the case...

mickey54

Have a look at scotlanddebt.co.uk ... It has the information.

Yorkshireman99

BillKing wrote: »

Many thanks Owain

It would appear that the advice from Begbie Traynor is based on English law? I haven't seen anything that says I am able to keep the lump sum of an inheritance under Scots law.

The AIB Scotland link doesn't state categorically that I can/cannot, but does make the distinction that I am not liable for payment to the trustee of any inherited lump sums after 4 years.

I think the most confusing part here is that although I am discharged after 1 year, in Scotland it would seem that I am not actually discharged until after 4 years (in reality).

I think the only option open to me now is to delay the presentation of the will to a solicitor (with my brother's agreement) until after the 4 year period has elapsed. I was under the impression that I could discharge my interest in a will as I was discharged from sequestration (1 year +), but it appears that this may not be the case...

It is very likely that the rules will prohibit all the schemes you are contemplating to avoid your liabilities. You really must get paid for professional advice. Your brother needs to know that conspiring in the way you are considering could end with a prison term.

BillKing

Thanks Yorkshireman

You make a good point. I imagine that you're probably quite correct in the assumption that rules will exist to prohibit this type of strategy.

I must therefore sadly contemplate the idea of my whole inheritance being given to the trustee.

I'm happy to pay for correct advice, but am still not entirely sure whether to entrust a solicitor, CAB, insolvency specialist or 'other' for the advice I truly need?..

Not_a_clue

Just from googling I think it depends if you had a Debt Contribution Order (for up to four years) at the end of your discharge from sequestration. If not then I think you are OK, if so, then your creditors are. You should seek advice from a Scottish debt advice service if you can as I see there have been a number of changes to Scottish law in this area in recent years and it isn't an area I'm familiar with.
See websites

scotlanddebt.co.uk/articles/sequestration/consequences-sequestration-bankruptcy-scotland

In conjunction with the last paragraph of

scotland.beatmydebt.com/news-articles/what-happens-if-i-receive-inheritance-during-a-trust-deed

Yorkshireman99

BillKing wrote: »

Thanks Yorkshireman

You make a good point. I imagine that you're probably quite correct in the assumption that rules will exist to prohibit this type of strategy.

I must therefore sadly contemplate the idea of my whole inheritance being given to the trustee.

I'm happy to pay for correct advice, but am still not entirely sure whether to entrust a solicitor, CAB, insolvency specialist or 'other' for the advice I truly need?..

Ask a solicitor not the others.

Owain_Moneysaver

BillKing wrote: »

I must therefore sadly contemplate the idea of my whole inheritance being given to the trustee.

From my reading, I don't think that is going to happen given you are now discharged, even if you are still making repayments. But even if it does, take the attitude that it's money you never had so won't miss.

Who is the executor of the will? They have a legal obligation to administer the estate, settle any liabilities of the deceased etc (including any benefits, pension or tax which has to be repaid to the government), pay any IHT due, and all that has to be done before any payment can be considered to the beneficiaries. You cannot delay or obstruct this process. If the executor does not adminster the estate correctly they may be personally liable.

If the executor is a solicitor they will carry out the bankruptcy search before paying you, so you could ask them, or ask your trustee handling your sequestration. It sounds like you must notify them anyway.

Keep_pedalling

The OP states in the opening post that the estate is being administered by a solicitor, so I would have thought the thing to do would be to speak to them.

BillKing

Thanks for the advice everyone - useful stuff.

My brother & I are joint executors, and my brother has only recently passed the will to the solicitor.

The reason I asked my second question in the original post, is that I am aware of 2 cases involving friends whereby the will was presented to a solicitor almost 2 years after the date of death without question. This was due to the main asset being a property, which one of the siblings decided to reside in whilst building their own new home. The siblings reached an agreement without legal intervention, and only when the deceased's property was being sold 2 years later was the will required (no IHT, benefit dues etc).

The other case was similar, but also involved a change of solicitors during the process. The net result being that the time frame from the date of death to the beneficiaries being awarded their inheritance was well over 3 years. This was a case which probably could have been settled in 6 months if all parties wished it to.

I will be taking paid legal advice this week however, so thank-you again for all the posts so far.