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New laws for Sharia wills: what has changed?

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31/03/2014
Solicitors Tamasine Hankey and Nicola Plant from Pemberton Greenish LLP explain what the new guidelines on drawing up 'Sharia-compliant' wills mean in practice.

The Law Society has issued guidelines to assist solicitors advising Muslim clients who want to draw up ‘Sharia-compliant’ wills.

According to the Office of National Statistics, there are 2.7 million Muslims living in England and Wales. They should be encouraged by any guidance given to lawyers which provides an understanding of how Sharia can be put into effect under English law.

Sharia allocates shares of the estate to designated classes of beneficiaries and it is not possible to deviate from, or override these allocations.

Under Sharia law a person’s estate passes in priority order as follows:

1. Pay the cost of the burial (which can be in accordance with Sharia) and any outstanding debts;

2. One third is given to charities or non-obligatory heirs (i.e. anyone the deceased wishes to benefit); and

3. The remainder is given to defined ‘residual’ heirs. Certain categories of people are prohibited from inheriting, for example, adopted children and non-Muslims.

Under English law individuals have complete testamentary freedom to leave their estates to whomever they choose. This includes leaving their estate to pass in accordance with Sharia. The only proviso is that the will must be valid under English law.

This sounds simple, but Sharia only determines how an estate actually devolves depending upon the structure of the family at the date of death. This creates a potential lack of certainty, which might affect the validity of the English will.

With potential changes to asset values, beneficiaries’ religious beliefs and family trees, there is no certainty when a will incorporating Sharia is created as to who will inherit until after death. Therefore, simply stating in an English will that an estate ‘must pass in accordance with Sharia law’ will not create a valid will.

The solution is to write a will that incorporates a discretionary trust, with an accompanying detailed letter of wishes. This allows the client to appoint executors, who act as trustees of the estate, to distribute it in accordance with the letter of wishes depending upon the circumstances that exist at the time. It is important to remember, however, that the trustees would have complete discretion and, although morally obliged to follow the letter of wishes, it’s important the client appoints individuals in whom they have full confidence to carry out their wishes after death.

That said, bear in mind that English law relating to succession cannot be completely overridden. The Inheritance (Provision for Family and Dependants) Act 1975 exists to protect certain categories of beneficiaries from being disinherited (generally spouses, close family or dependants), allowing them to bring a claim against an estate if they have not been provided for. As Sharia favours males, a wife (or other female relative) is potentially protected under this Act in just the same way any disinherited wife would be under English law.

When undertaking succession planning it is also important to consider the tax implications. Estates that devolve under Sharia may not fully utilise the valuable inheritance tax ‘spouse exemption’, thereby creating a tax liability on the first death. By using trusts it is possible to avoid this, while still enabling assets to pass in accordance with Sharia.

English rules of succession have always afforded respect to other cultures and religions by virtue of the principle of testamentary freedom.

While our laws relating to succession and tax can never be completely disregarded, the recent Law Society guidance will be a useful reference point to lawyers when advising clients on estate planning under Sharia law.

 

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