Posted by James McNeile, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
Islam guides Muslims on how various aspects of their lives should be conducted and included in this is the duty that Muslims must distribute their assets in accordance with the Quran principles.
As the law of intestacy in England and Wales is at odds with the specific distributions that are set out under Sharia law, as a starting point, it is of paramount importance that a bespoke Islamic Will is drawn up by Muslims to prevent incorrect and unwanted distributions. Those individuals with assets of more than £325,000 may wish to go further and benefit from effective inheritance tax planning so as not to burden their beneficiaries with a hefty tax bill on death.
Distribution of wealth under Sharia law must comply with the prescribed steps as follows:
1. Any outstanding debts owed by the deceased should be repaid
2. Any funeral expenses should be paid from the deceased’s estate (unless the family voluntarily wish to meet this expense themselves)
3. Any legacies may be made as stipulated in the Will but the total of these must not exceed 1/3rd of the total value of the deceased’s net estate. There are restrictions to the legacies that can be made, described briefly below.
4. The remaining assets must be distributed in accordance with Quranic injunctions by fixed shares.
The ability to make legacies allows the testator to make bequests to those who are not entitled under the Quranic injunctions (those entitled will receive assets under step 4 as mentioned above). This may include for example non-Muslims who are not entitled to receive under fixed shares but may be family members.
If there are no legacy bequests then the 1/3rd share will be distributed amongst surviving relatives as set out under Sharia law.
The Quranic verses stipulate precisely the shares that a surviving spouse, parent, child, grandchild, brother and sister may acquire from the remaining 2/3rds of the deceased’s estate. There are complicated calculations to determine who is entitled to what, and these can be further complicated according to which Islamic sect the deceased is part of, which is why the advice of an Imam experienced in this area of law is often consulted.
Due to this specific nature there is therefore an administrative difficulty in naming the beneficiaries and the precise shares of the estate they are entitled to, as of course, there is no certainty that the beneficiaries will outlive the testator! The best way to get around this is therefore to place the assets in trust (often a discretionary will trust) and place an obligation on the trustees to administer the trust under Sharia law and principles by completing a Letter of Wishes.
By doing the above a Muslim testator will be able to ensure that his final wishes are carried out in the manner indicated by Islam, as well as complying with the law of England and Wales without falling foul of intestacy rules. However, as one can see, this is a tricky and technical area of the law, where sound legal advice is advisable to ensure that there will be no questions of validity, nor difficulties in applying the Will further down the line.
If you have any comments on this blog please contact Tony Millson, Partner for the Private Client Department on 020 7583 2222 or firstname.lastname@example.org