Law Society of Scotland Professional Education and Training (PEAT) PEAT 1: Private Client - Wills, Executries and Trusts Syllabus

Do legal rights attach to heritable or moveable property in Scots law?

Moveable property only (e.g. cash, shares, vehicles, furniture). Heritable property (land and buildings) is NOT subject to legal rights.

What is 'collation inter liberos' and when does it apply?

When children claim legitim, a child who received advances from the parent during life must add ('collate') those advances back into the legitim fund so all children are treated equally, before the fund is divided. It applies only among children claiming legitim, not to spouses.

Can legal rights be defeated by a will, and what is 'approbate and reprobate'?

No — legal rights cannot be excluded by a will (they are indefeasible/forced shares). A beneficiary cannot both accept a legacy under the will AND claim legal rights; they must elect ('approbate or reprobate'), choosing the more valuable.

Distinguish vesting 'a morte testatoris' from vesting 'subject to defeasance'.

A morte testatoris: the right vests in the beneficiary immediately on the testator's death. Subject to defeasance: the right vests but may be divested later if a specified condition occurs (e.g. the beneficiary dies before a later date or another beneficiary is born).

What is the difference between a suspensive and a resolutive condition attached to a legacy?

Suspensive (condition precedent): the right does not vest until the condition is purified (e.g. 'if A attains 25'). Resolutive (condition subsequent): the right vests now but is lost if the condition occurs (e.g. 'until A marries').

What is the effect of the conditio si institutus sine liberis decesserit?

An implied condition (in favour of a legatee's issue) that if a named institute (often a relative of the testator who is treated as a class member) predeceases the testator leaving issue, those issue take the legacy in place of the deceased legatee, preventing lapse.

What is the distinction between an executor-nominate and an executor-dative?

Executor-nominate: appointed by the deceased in the will. Executor-dative: appointed by the sheriff court where there is no will, no executor named, or the named executor cannot act (typically the next-of-kin entitled on intestacy).

What is 'confirmation' in Scots executry practice and what document is lodged to obtain it?

Confirmation is the sheriff court grant authorising the executor to administer (ingather and distribute) the estate — equivalent to a grant of probate. The executor lodges an Inventory of the estate (Form C1/C3 and inventory) with the court.

What is an 'eik' to confirmation?

A supplementary grant obtained where additional estate is discovered after the original confirmation was issued, or to correct/extend the inventory. It 'adds to' the original confirmation.

When must an executor-dative usually find caution, and what is it?

Caution (pronounced 'kayshun') is a guarantee/insurance bond protecting the estate against the executor's failure. An executor-dative generally must find caution (commonly a bond of caution from an insurance company), whereas an executor-nominate and a surviving spouse taking the whole estate are usually exempt.

What does it mean for an executor to 'ingather' the estate?

To collect in and take possession of all the deceased's assets — encashing bank accounts, transferring/selling shares, recovering debts due, taking title to and realising heritable property — using the confirmation as authority.

In administering an estate, what is a 'docket' (docquet) transfer of heritable property?

Under the confirmation, the executor can transfer heritable property directly to a beneficiary by endorsing a docket on the certificate of confirmation, avoiding the need for a separate disposition where title passes to the person entitled.

What protective step should an executor take regarding unknown creditors before distributing, and what is the prescriptive period for most debts?

Advertise for creditors and wait before distributing; most obligations prescribe (extinguish) after the 5-year short negative prescription under the Prescription and Limitation (Scotland) Act 1973. Executors may be personally liable if they distribute prematurely to the prejudice of creditors.

What is a 'discharge' of executors and why is it sought?

A formal acknowledgement (often in the form of a discharge/receipt signed by the residuary beneficiaries) confirming the estate has been correctly administered and accounts approved. It protects executors from later claims of maladministration.

What is the 'small estate' threshold in Scottish executry and what simplified procedure applies?

An estate not exceeding £36,000 (gross) is a 'small estate'. The sheriff clerk will assist the applicant to prepare the inventory and obtain confirmation, a simplified and assisted procedure.

In an insolvent (bankrupt) Scottish estate, state the broad order of priority for paying debts.

1) Deathbed and funeral expenses (reasonable) and expenses of administration/sequestration; 2) preferred debts; 3) ordinary unsecured debts; 4) interest on debts; 5) postponed debts. Secured creditors are paid from their security first. Legacies are paid only if the estate is solvent.

Define a trust and name its three essential parties in Scots law.

A trust is a legal relationship where a truster transfers property to a trustee to hold and administer for the benefit of beneficiaries (or a purpose). The three parties are the truster (settlor), the trustee, and the beneficiary. One person can occupy more than one role.

Distinguish an inter vivos trust from a mortis causa (testamentary) trust.

Inter vivos: created and takes effect during the truster's lifetime by a deed of trust. Mortis causa (testamentary): created by will and takes effect on the truster's death.

Explain the difference between a liferent and a fee in a Scottish trust.

A liferent gives the liferenter the use of/income from property for life; the fee (capital) is held for the fiar, who becomes entitled to the capital on the liferenter's death. It is a way of splitting enjoyment over time.

What is a discretionary trust and how does it differ from a bare (simple) trust?

Discretionary trust: trustees have discretion over which beneficiaries (from a class) receive income/capital and how much; no beneficiary has a fixed entitlement. Bare/simple trust: a beneficiary has an absolute, immediate vested right and the trustee holds as nominee, transferring on request.

What is the leading duty meaning a trustee must not be 'auctor in rem suam'?

A trustee must not place themselves in a position where their personal interest conflicts with their duty to the trust (no self-dealing, no unauthorised profit). Any such transaction is voidable regardless of fairness or good faith.

List four core fiduciary duties of a Scottish trustee.

(1) Take possession of and secure the trust estate; (2) keep proper accounts and provide information to beneficiaries; (3) act impartially between beneficiaries; (4) exercise reasonable care and not delegate decisions improperly; plus invest prudently and not be auctor in rem suam.

What statute sets out the general statutory powers of Scottish trustees, and how is a trustee's standard of care now framed?

Historically the Trusts (Scotland) Act 1921 (s.4 general powers); now substantially replaced/restated by the Trusts and Succession (Scotland) Act 2024. Trustees must exercise the care and diligence a person of ordinary prudence would exercise in managing the affairs of another.

How may a trust be terminated by the beneficiaries under Scots law (the rule analogous to Saunders v Vautier)?

Where all beneficiaries are ascertained, of full age, and of full legal capacity, and together absolutely entitled, they may agree to terminate the trust and require the trustees to denude and transfer the property (the rule in Miller's Trustees v Miller).

Under the Trusts (Scotland) Act 1961, s.1, when does the court approve a variation of trust purposes on someone's behalf?

The court may approve a variation/arrangement on behalf of beneficiaries who cannot consent themselves — those who are incapax, unborn, unascertained, or minors — provided the variation is not prejudicial to (is for the benefit of) those persons. Capable adult beneficiaries must consent personally.

State the current standard inheritance tax nil-rate band, the residence nil-rate band, and the standard rate of IHT on death.

Nil-rate band: £325,000. Residence nil-rate band (for a home passing to direct descendants): up to £175,000. Standard rate on death: 40% on the estate above available bands (reduced to 36% if at least 10% of the net estate is left to charity).

Explain the IHT spouse exemption and the transferable nil-rate band.

Transfers between UK-domiciled spouses/civil partners are wholly exempt from IHT. Any unused proportion of the first spouse's nil-rate band (and RNRB) can be transferred to the survivor's estate, potentially giving a couple up to £1m of allowances.

What is a 'potentially exempt transfer' (PET) and how does the 7-year rule with taper relief work?

A PET is an outright lifetime gift to an individual; it becomes wholly exempt if the donor survives 7 years. If death occurs within 7 years it is chargeable, but taper relief reduces the tax (not the value): 0–3 yrs 100% of tax, 3–4 yrs 80%, 4–5 yrs 60%, 5–6 yrs 40%, 6–7 yrs 20%.

How does capital gains tax treat assets on death, and what 'uplift' occurs?

Death is not a disposal for CGT, so no CGT arises on death. Instead, the assets are acquired by the executors/beneficiaries at their market value at the date of death (the 'CGT uplift' or 'rebasing'), so pre-death gains escape CGT.

How does the CGT annual exempt amount and rate for trusts compare to that of individuals?

Trustees receive an annual exempt amount equal to one-half of an individual's AEA (shared among trusts created by the same settlor, subject to a minimum). Most trusts pay CGT at the higher trust rate (currently 24% on residential property and other gains following the 2024 alignment), rather than the lower individual rate.

Under the Adults with Incapacity (Scotland) Act 2000, name the two types of power of attorney and what each covers.

(1) Continuing power of attorney — covers property and financial affairs (can take effect immediately and continue after incapacity); (2) Welfare power of attorney — covers personal welfare and medical decisions and can only be exercised once the granter has lost capacity.

What formal step must be taken before a continuing or welfare power of attorney can be used in Scotland?

It must be registered with the Office of the Public Guardian (Scotland). It must also be in writing, subscribed, and include a certificate from a solicitor or doctor that the granter understood its nature and was not acting under undue influence.

Distinguish an intervention order from a guardianship order under the Adults with Incapacity (Scotland) Act 2000.

An intervention order authorises a one-off or specific decision/action regarding an incapable adult's property, finances or welfare. A guardianship order appoints a guardian with ongoing authority to make continuing decisions, typically for longer-term or repeated needs. Both are granted by the sheriff.

What are the five general principles a sheriff must apply when making any decision under the Adults with Incapacity (Scotland) Act 2000?

(1) Benefit to the adult; (2) the least restrictive option; (3) take account of the adult's past and present wishes; (4) consult relevant others (nearest relative, carers, attorneys/guardians); (5) encourage the adult to exercise and develop existing skills.