Pitfalls to drafting a Sharia-compliant will under English law

The Law Society’s recently issued practice note for assisting solicitors with drafting Sharia-compliant
wills has received a great deal of publicity that goes far beyond its purpose.

The guidance alludes to certain difficulties that may be faced, not least that Sharia law differs between some Muslim countries and that there are differences between Sunni
and Shi’a rules.

Long division

Under English law, there is testamentary freedom. The Qur’an provides the source for the laws of inheritance in Islam. It goes further to provide how the estate should be divided.

In broad terms, one-third can be disposed of as the testator wishes. The remainder, which must be at least two-thirds of
the estate, passes to surviving relatives in the manner stipulated by Sharia.

The will should ideally stipulate precisely what percentage is due to the beneficiaries in accordance
with the Qur’an. However, this cannot be determined until after the testator’s death, as it will depend upon the family members who have survived.

It is not always easy to work out the division, although there are websites to assist with
the calculation.

One way to resolve this is to place the assets in trust. Usually, this would be a discretionary trust and would leave the trustees to follow Sharia law on the testator’s death. Executors and trustees should be Muslim, although certain schools allow non-Muslim professional trustees on the basis of their legal expertise.

The will still has to comply with English law. It needs to
be in writing and must have
two witnesses.

The intestacy rules are at
odds with the Qur’an. If a
Muslim dies intestate, the
estate passes under English
law. It may be possible to
vary the intestacy provisions
to distribute the estate in accordance with Sharia law.

However, this will not be possible without the court’s consent in the case of minor or incapable beneficiaries.

The fact that it is never good advice to rely on the intestacy rules applies equally to Muslims and non-Muslims.

The effect of the Inheritance (Provision for Family and Dependants) Act 1975 applies
as much to a Sharia-compliant will as it does to any other will
or the intestacy provisions.

It is too soon to know how much weight the courts will
give to the testator’s wishes to comply with the Qur’an against
a claim made under the 1975 Act. A declaration of faith may
be relevant, but English law
still applies.

Sharia law does not recognise a joint tenancy or indeed other assets that pass outside the will. This is because it could defeat Sharia principles defining the shares that family members can inherit. Property should therefore always be held as beneficial tenants in common.

Further issues may arise if a Muslim has a second or further wives. The Qur’an provides how the estate will pass, but it will
be important to check if the marriage is valid.

Inheritance tax

Inheritance tax planning is difficult when drafting a Sharia-compliant will. It may be possible to create an immediate post-death interest with the spouse as the beneficiary. The trustees could be given powers to appoint assets in favour of other beneficiaries to comply with Sharia law.

This would enable a couple
to benefit from the transferable nil rate band, but would then involve assets being taken from the surviving spouse.

Inheritance tax also needs to be considered in the division of the estate between exempt and non-exempt beneficiaries to ensure that the divisions remain Sharia-compliant.

One-third of the estate can pass to charity, which may be an option if there is an inheritance tax liability. This may enable the estate to benefit from the reduced rate of 36 per cent, although care will be needed
in the drafting.

Generally, life assurance is
not a permitted asset for a Muslim, although some schools will allow it if its purpose is to
pay inheritance tax. In many cases, the benefit will have
been written in trust and so
may pass outside the will.

“It is the duty of every Muslim who has anything to bequeath not to let two nights pass without writing a will about it.”
Sahih Al-Bukhari SJ

Jacqueline Almond is a partner at IBB Law