Families Matter

The Scottish Family Business Association exists to support, nurture and help develop the full potential of all our Scottish family businesses. Research, expertise and experience from across the globe show that by adopting specific best practices family businesses can overcome inherent challenges and flourish both as businesses and as families.

Although it is not always recognised family businesses already dominate the Scottish economy, accounting for 69% of all businesses in Scotland and create around 45% of the GDP of our country. Yet despite these facts 57% of family firms have no defined plans for succession and most conflicts in family firms arise from family issues such as succession or family relationships. Indeed most family businesses fail for family rather than business reasons. Only 33% of family businesses survive into the second generation with only 9% surviving into the third generation.

So if failure  of family firms is predominately due to family reasons  then concerns  about succession planning, Wills , Powers of Attorney and Pre-nuptial and Co-habitation Agreements can hold equal sway with the sustained success of a family business as any application of commercial law.

There are three matters to consider.

The first is succession planning. . If someone dies without a Will in Scotland their estate is administered according to the law of intestacy which means that rather than the business passing in a planned way from one sibling or generation to another, the future of the business will be decided by the law which in some cases may lead to very young children or distant relatives inheriting control of the family business.

Secondly to have a Power of Attorney is very important.  If a business owner or partner cannot work as a result of serious illness or accident then a Power of Attorney will help ensure that the business can carry on as usual. In fact a Power of Attorney can be pivotal to the continuity of the family business and it should be noted are also appropriate for even the youngest and fittest of business owners.

Lastly in family firms decisions around corporate structure, share issue and personnel are often based on commercial or tax reasons  and it is easy to overlook the consequences of relationship breakdowns for the business. Pre-nuptial contracts and cohabitation agreements can ring fence a family business from being included in divorce or separation settlements therefore safeguarding the future of the business.

Why leave your family firm exposed if certain events or misfortunes occur.  Far better to plan the future of your business and have a Will, Power of Attorney  or Prenuptial or Cohabitation Agreement in place. If I can help please contact me rjl@mitchells-roberton.co.uk or by phone 0141 552 3422

A new Bill to tackle psychological domestic abuse has been published

The Domestic Abuse (Scotland) Bill aims to strengthen the law against people who psychologically abuse their partners using coercive and controlling behaviour.

For the first time, the Bill will create a statutory offence of domestic abuse by recognising the damage which non- physical abuse can cause. Such behaviour could include subordination, humiliation, isolating a partner from friends, relatives and sources of support and controlling or monitoring their day to day activity.

First Minister Nicola Sturgeon met survivors of abuse at the Glasgow Young Women’s Movement (YWCA) as the Bill was introduced to Parliament.

Ms Sturgeon said: “ I am proud that as a society, we’ve come a long way from believing that domestic abuse is only a physical act. The truth is that the psychological scars left by emotional abuse can have devastating effects on victims and this government will work hard to make sure perpetrators face the justice they deserve.”

“This Bill will help our police and prosecutors hold abusers to account- but importantly, it also shows those who have suffered abuse that we stand with them and will take the steps needed to help them.”

Kara Brown, Director of YWCA Scotland added “The Young Women’s Movement is proud to be part of a country breaking ground through new progressive legislation.”

“We welcome this legislation as a critical tool to reduce stigma, raise understanding and encourage survivors of mental, financial and physical abuse to come forward.”

Government Urged to Act on Retirement Housing

Two separate organisations representing the interests of older people have called for a “revolution” in the provision of housing to better meet the needs of those in retirement.

Saga has called on the Chancellor to introduce a Stamp Duty (in Scotland Land Building Transaction Tax)  exemption for those downsizing in retirement. Their recent research has provided compelling evidence that a third of over 60s want to downsize but are deterred by the cost. Abolishing Stamp Duty or in Scotland LBTT ,on age related housing developments would encourage downsizing, add to the housing stock, and help free up housing for younger people aspiring   to own their own home.

Saga’s call for a greater focus on the housing needs of retirees has been echoed by the International Longevity Centre-UK. (ILC-UK) This think tank’s study has revealed that:

  • Nearly 9 in 10 of the 65-79 age group live in under- occupied housing- over 50% live in homes with two or more excess bedrooms
  • According to calculations, there could be a retirement housing gap of 160,000 by 2030 and if the current trend continues by 2050 the gap could grow to 376,000.
  • Retirement housing is much more likely to contain adaptations for elderly living than other forms of housing. Therefore as well as freeing up a range of properties throughout  the housing market downsizing in later life  into retirement housing could help to ensure more people can stay in their homes for longer ,reducing pressure on the residential care sector.
  • When it comes to reasons why older people are currently choosing not to downsize, the ILC-UK’s findings are similar to Saga’s with Stamp Duty or LBTT and other financial costs posing a significant barrier.
  • It also found that lack of suitable housing on the market was a major deterrent.

“The Housing Minister is right to recognise that meeting the needs of last-time buyers and encouraging downsizing is crucial to addressing the housing crisis” commented Baroness Sally Greengross ,Chief Executive ICL-UK. “Downsizing can also ensure that older people live in properties that allow them to stay in their own homes for longer and can release equity that can be used to fund social care in later life.”

“Government should also consider what changes can be made to Stamp Duty (or LBTT) to remove the perceived financial barrier of downsizing” she said.

If you intend to buy or sell property in Scotland, then please contact me Marcus Downie by email marcus@mitchells-roberton.co.uk or by phoning 0141 552 3422 and I will be delighted to help.

Should you consider a postnuptial agreement?

Marriage or civil partnership is a relationship that most of us will enter into at some point in our lives. Pre and post-nuptial agreements can be an effective and simple way of protecting the interests of both parties within such partnerships. Generally both types of agreement will determine the division of assets if a marriage or civil partnership breaks down.

In fact there is a growing interest in postnuptial agreements -similar to a prenuptial agreement but made after a marriage or civil partnership has already been entered into.

Postnuptial agreements are most appropriate in certain circumstances:

  • Where someone is to receive (family) wealth during the marriage or partnership and wants certainty about what would happen to the capital if the relationship failed:
  • Where one spouse or partner intends to take time out of work and wants financial security during that period or subsequently: or
  • The parties considered a prenuptial agreement but did not get round to it and there may have been unequal wealth coming into the relationship, it may be a second marriage with  the divorce process the first time around being harrowing or there may be children of a previous marriage.
  • There could be a family business to think about so that control of the business is preserved within the family in the event of a relationship floundering.

There are, however, some common misconceptions that often deter people from giving postnuptial agreements serious consideration namely:

  • They are only for the rich. This is not true.
  • They are not legally enforceable. In Scotland prenuptial and now postnuptial agreements have been a legal norm for quite some time and enforceability should not be an issue if the agreement is correctly drawn up.
  • That such agreements undermine a relationship. Many believe that the modern reality is that a well-made pre or postnuptial agreement can be viewed as a solid foundation for a marriage or civil partnership by introducing clarity and transparency. That said there will be many who believe that a marriage or civil partnership should be based on trust and will remain reluctant to enter into such a formal agreement their vows remaining more paramount to considerations of avoidance of future disputes.

To have and to hold from this day forward
For better for worse
For richer for poorer
In sickness and in health
To love and to cherish to the exclusion of all others
For as long as we both shall live.

What do you think?

Voluntary Registration- Would it benefit you?

At the moment less than 30% of land in Scotland is registered in the Land Register of Scotland which is a digital map- based Register.  The remainder of land is still recorded in the General Register of Sasines which is a Register of historic deeds.

The Scottish Government has asked the Keeper of the Registers of Scotland to complete the Land Register by 2024, meaning that all Scottish land should be registered by then. This is indeed a tall order and one way the Registers of Scotland hope to achieve this goal is by encouraging private and public landowners to voluntarily register their land.

Voluntary Registration permits an owner of an unregistered plot of land to apply for registration of that plot in the Land Register at any time. No new deed is needed although a new Land Register  Plan may be required.

However not only will voluntary registration help the Land Register to achieve its aims by 2024 but there are added advantages for landowners in registering their plots of land.

  1. The Land Register requires an exact plan which does not overlap with any other registered titles thus clarifying the definitive boundaries of a piece of land providing certainty to owners.
  2. Also once a title is registered any questions from neighbours and others about boundaries can be dealt with speedily and cheaply as it avoids laborious title examination or arguments over ownership where the titles are unclear, as often they are. This can be extremely pertinent for rural estates and farms or where a landowner wishes to sell land to a developer.

Currently the Registers of Scotland are offering a 25% discount on the cost of the Voluntary  Registration application fees to landowners  who undertake the process. The fees are calculated depending on the value of the land or property involved and  range from £45 to £5625.A plans assistance service has also been set up by the Registers to help with the preparation of plans which are suitable for registration.

If you would like help in assessing whether your property would benefit from Voluntary Registration please contact Alison Gourley on 0141 552 3422 or by email ajg@mitchells-roberton.co.uk

We Need More Houses

A recently published White Paper on the housing market in England described it as “broken”. According to the White Paper the reason for this is simple- not enough houses are being built, now and in the past and supply significantly lags behind demand. It is estimated that 160,000 new homes have been built annually in England since the 1970s but the actual supply needed to keep up with an increase in population and a historic under-supply of housing is believed to be closer to 250,000.

And it is not the lack of land to build on which is the problem, with only 11% of English land currently built on. Instead the White Paper blames the chronic under-supply of housing on three main factors namely:

  • There are not enough local authorities planning for the homes they need
  • House building is too slow
  • The construction industry is too reliant on a small number of big players

The gap between demand and supply has of course an impact on house prices. Since 1998 the ratio of average house prices to average earnings has apparently more than doubled, making home ownership unaffordable for millions of people. The Coúncil of Mortgage Lenders predicts that by 2020 only a quarter of 30 year olds will own their own home.

Scotland faces similar problems. According to industry body Homes for Scotland the total number of new houses being built in Scotland each year is still down 40% on pre-recession levels, whilst the country’s population has grown to its highest ever level.

“As Sajid Javid said, the root cause of the housing shortage is the simple fact that not enough houses have been built, and that applies equally in Scotland”,commented Nicola Barclay, Chief Executive of Homes for Scotland.

“We need to move away from thinking of housing policy  in terms of election cycles and narrowly focusing on ‘affordable housing’  and instead look at the requirements for all tenures over the next 15-20 years” she added.

“We also need to be brave about the issues that are holding housing back, like the availability of land and the provision of infrastructure, or we will never have enough homes to meet the diverse needs and aspirations of those living in Scotland” she said.

If you intend to buy or sell property in Scotland, I can help. Please contact me Marcus Downie on 0141 552 3422 or by email on marcus@mitchells-roberton.co.uk

Whose Home Is It Any Way?

When a relationship ends one of the most vexing concerns for many is whether one person can force the other to leave a shared family home.

There are three typical scenarios.

  • Firstly if a couple are married or in a civil partnership and the property is owned by only one person or the tenancy is in the name of only one person, the person who owns the house or holds the tenancy has the right to stay there. That said they cannot force their spouse or civil partner to leave, as a “non-entitled” spouse or civil partner has the right to continue to live there. If the property owner wants to sell they would need to obtain the consent of their spouse or civil partner .If that consent was unreasonably withheld then a court order would be required to waive the need for consent. The only way in which a spouse or civil partner can remove a former partner is to raise a court action and seek an exclusion order. The threshold needed for success in this is very high and an exclusion order is only granted for the protection of any spouse or civil partner or child of the family. It is frequently granted in cases of domestic abuse.
  • Secondly if both parties are joint owners or tenants then both have the right to occupy the home and again neither can evict the other unless an exclusion order is obtained. If one person wants to sell and the other does not then an action of division and sale needs to be raised for the court to order a sale. The other party can ask the court to postpone or delay the sale and sometimes the court will do this if there are children of the marriage and there is no alternative accommodation.
  • Thirdly if a couple are cohabiting and only one person is the owner or tenant the other is still protected and cannot be locked out or forced to move. However the cohabitant’s right to occupy is not automatic and he or she has to have the right declared by the court with a right to occupy, if granted, only lasting for six months although the court can extend it for another six months. Where cohabitants are joint owners or tenants then neither can force the other to move out and if one party wishes to sell and the other does not then an action of division and sale will need to be raised. Unlike spouses or civil partners cohabitants do not have the same rights to ask the court to postpone or refuse a decree of sale.

If you would like advice on any of the issues raised above please contact Fiona Wayman on 0141 552 3422 or by email fhw@mitchells-roberton.co.uk.