Children claiming 'inheritance' from parents who are still alive

The economic downturn has driven a rise in money disputes in Scottish families as more people lay claim to assets left behind on a family death.

Scottish succession experts have seen a marked upturn over the past two years in family disputes that they believe are a direct result of growing financial pressures, as government austerity measures take effect and unemployment rises.

The trend has also been noted by the Financial Ombudsman Service, which received more than 3,500 family-related disputes last year, an increase of about 500 on previous years.

It said the rise reflected difficult economic conditions and the impact that money-related pressures can put on family relationships.

There has been a particular increase in cases where adult children in Scotland have claimed non-property assets to which they are entitled when their first parent dies, often at the expense of the surviving parent.

Under Scottish succession law, when someone dies the surviving spouse or civil partner and children are entitled to certain legal rights out of the deceased person's moveable estate. These rights operate regardless of whether there is a will and give children some entitlement to movable assets, such as cash, investments, insurance proceeds and the contents of the property, but not the property itself.

The surviving spouse or civil partner is entitled to a third of those assets if the deceased left children or grandchildren, or to half of it if there are no children. The child or children are, in turn, also entitled to a third of the moveable estate, or half if the deceased did not have a spouse or civil partner.

Historically, these rights have been claimed only rarely, but experts say cases in which children opt to take them up are on the rise.

Malcolm Rust, partner at Shepherd & Wedderburn, believes the trend is a consequence of the financial downturn, with money worries making children more bullish in their approach to any entitlements they might have a claim on.

He said: "The number of legal rights claims has definitely gone up, perhaps as much as threefold over the last 12 months. People have lost their jobs, or their jobs are at risk, and they have suffered a loss of income from their savings.

"That manifests itself in cases where, especially on the first death of a parent, the estate goes to the spouse and the children are not named, the latter are exercising their right to claim."

Claims are being made even if it compromises the potential for rights when the surviving parent dies, he added.

"We are only going to see more of this and more cases will be going to court.It's all in the backdrop of strange economic times, with people feeling exposed financially.

"Normally, the child or children would be happy to leave everything with the surviving spouse, but that is changing," said Mr Rust.

Alison Paul, trusts and tax partner at Turcan Connell in Edinburgh, said: "It goes without saying that, in an increasingly litigious society, with greater access to information about their rights in the press and on the internet, it is not surprising that contentious cases are on the increase."

Claims made by co-habitees are also becoming more prevalent, following a change in cohabitation legislation, said Ms Paul.

"Prior to 2006, co-habitees had no financial rights on the death of a partner; now they do, if there is no will, although the time scale for any such claim is tight," she explained.