Flower of Scotland

It has been a difficult few years for legal practitioners in all sectors and the Scottish legal market has not escaped the ravages of the ongoing, deep-set recession. Many firms have had to deal with the realities of redundancy, reduced working hours and pay freezes – issues never before experienced in the legal world. The private client sector in Scotland has not gone unscathed and the housing market has been particularly badly affected. Indeed, it would not be too wide of the mark to suggest that the number of property purchases and sales now is almost half what they were three or four years ago.

There are, without question, a great number of reasons for the downturn in the property market, but many believe that the reluctance of lenders to release funds must surely take the lion’s share of the blame. The introduction of the home report to the Scottish housing market, a single survey to be produced by the property seller, has not proved popular with the Scottish legal profession, but, with so many other factors affecting the property market, it is difficult to assess what the real impact of this legislative change has been.

Bright side

All that said, the recession has not been all doom and gloom for the private client practitioner in Scotland. Never before has a commercial firm valued its private client team quite so highly, recognising that family matters still require to be attended to, estates still need to be wound up, powers of attorney must still be put in place and estate planning still sits high on the agenda for many. And all that regardless of the economic state of the nation.

Historically, the private client arm of any commercial firm might well have been regarded as a support service, working in the shadow of the mighty weight of the corporate and commercial property teams. The recession, while unwelcome, has allowed the private client practitioner to show the commercial value in the work that they do, highlighting the importance of the service that they provide. It is becoming an undisputed view that a well-run private client department can make a real contribution to the firm’s performance, particularly in difficult times, and, if we are looking for a silver lining in the cloud that is the recession, the status of the private client practitioner has been elevated to a new, well-deserved height.

The rise of the private client practitioner in Scotland can be attributed to a number of factors, not least the desire of the canny Scot to manage his estate in a tax-efficient manner.

The freezing of the inheritance tax (IHT) nil-rate band at £325,000 has prompted more people than usual to consider the IHT planning options available to them. The introduction of the transferable nil-rate band caused some to wonder whether estate planning advice might diminish but that has not proven to be the case. The use of nil-rate band trust provisions in wills may have faltered but outright gift making is increasingly popular, particularly where young family members struggle to raise the necessary finance to allow them to take that first step on the property ladder.

More sophisticated estate planning continues to grow too, and much of this is down to the productive interaction of the private client practitioner with other professionals, such as accountants and independent financial advisers. In Scotland, the use of bespoke discretionary trusts as a vehicle for carrying potential death-in-service benefits and pension benefits is an area of significant growth and clients and intermediaries recognise the value of making such arrangements as a means of effective estate planning.

Meeting needs

Concerns about the funding of long-term care still abound, although the position of the Scot requiring care has been eased as a consequence of the Scottish government funded personal and nursing care allowances. Those qualifying for the non-means tested personal care allowance currently receive a contribution of £156 per week towards their care costs, increasing to £227 per week where the adult requires nursing care too. This can go some way towards meeting the average weekly care home charge and careful management of the adult’s estate can often lead to care home costs being met without the family home having to be sold.

Far-reaching legislative changes over the course of the last few years have added to the recognised workload of the Scottish private client solicitor, particularly where cohabiting couples are concerned. It is widely recognised that many of these legislative changes would not have made it to the statute books if the Scottish parliament had not come into being and if all Scottish legislation was still the responsibility of Westminster.

The Family Law (Scotland) Act ?2006 conferred rights on cohabiting couples, being couples who live or lived together as if they were husband and wife or civil partners.

The 2006 Act allows an award to be made in favour of a cohabitant where the deceased cohabitant dies intestate. The surviving cohabitant must make a claim for such an award and the extent of the award is not fixed in the way that, for example, a child’s legal right in Scots law would be. This can often lead to the surviving cohabitant making a claim against the estate of the deceased cohabitant, this claim being in direct conflict with the rights of the deceased cohabitant’s children, who are often also the children of the surviving cohabitant. The surviving cohabitant might be representing the interests of their children in the deceased’s estate while raising a conflicting claim in his or her own right. Separate representation is required and so the surviving cohabitant can have two different solicitors representing his or her separate and conflicting interests.

Despite the passage of time since the 2006 Act came in to force, there is still a lack of guidance as to how Scottish courts will deal with a surviving cohabitant’s claim in circumstances like this. It could be said that this lack of guidance is, to a great extent, down to solicitors agreeing a settlement before the matter reaches court. This has been a new area of practice for the private client solicitor in Scotland and has added to the depth of work being carried out in private client teams.

Growing influence

The 2006 legislation extends beyond the death of a cohabitant and relates also to situations where cohabitants separate. This prospect has prompted increasing numbers of couples to consider documenting their financial arrangements on agreeing to cohabit and more and more private client solicitors in Scotland are being instructed to prepare cohabitation and prenuptial agreements. Historically, there has been more of a willingness for agreements of this sort to be regarded as binding in Scotland and their popularity is increasing as they become more and more socially acceptable. The changing attitude of the English courts will surely serve to strengthen the position of these sorts of agreements north of the border and it is likely that the preparation of this sort of document will take up ever increasing amounts of the Scottish private client solicitor’s time.

Some 11 years on, there is ever-increasing public awareness of the Adults with Incapacity (Scotland) Act 2000 and private client solicitors are succeeding in educating their clients about the use of continuing (financial) and welfare power of attorney documents. These sorts of powers allow the capax adult to appoint one or more people to deal with the management of their affairs should they become unable to do so themselves. More and more clients are being encouraged to put such documents in place, to the extent that the waiting time to have these documents registered with the Scottish Office of the Public Guardian can be three months or more.

This is not a time for the Scottish private client solicitor to be complacent, but neither is it a time to be downhearted. The role of the ‘family lawyer’ remains as relevant now as it ever was, arguably more so, and the depth and breadth of services being provided by those working in this field continues to develop. There has long been a view that nothing ever changes in the ‘death department’ but the complexity of family life and Scottish legislative attempts ?to keep abreast of this mean that things are continually progressing, despite ?the recession.

Pamela Niven is a partner at ?Bird Semple