According to Islamic law, when a husband dies, his wife inherits one eighth of his estate. Should the wife want to benefit from the remainder of her late husband’s estate, she needs the permission of the surviving Islamic inheritors. These other inheritors could be, for instance, the mother-in-law, father-in-law and all of the late husband’s children. It is likely that these inheritors have never been told they need to give said permission, but the widow must seek it nonetheless. If, for instance, she is seeking permission to benefit from a property to which the inheritors have a claim, the widow would effectively need to pay them rent for the duration of her residence there.
Similarly, if a wife dies, her husband inherits a quarter of her estate. If that husband should want to benefit from the remainder of his late wife’s estate, he would also need to seek permission from the surviving Islamic inheritors and pay them rent to reflect their foregone portions. All of the above can happen pretty simply for straightforward estates. The net result, however, is a complicated one in order to manage the entire process. Not to mention more expensive in the medium to long term as well.
There are a number of situations that ‘Islamic’ estate planning and ‘Islamic’ wills do not deal with directly. For example, such setups do not account for leaving additional wealth to a disabled beneficiary; they do not protect wealth from third-party threats or allow for optimum intergenerational planning. Given that estates rarely have to deal with inheritance tax alone, they also fail to address how to optimise the structuring of an estate from a taxation point of view.
Most importantly, this type of estate planning does not reflect the changing roles and pressures of men and women today, in contrast to even 100 years ago let alone 1400 years ago. For instance, a daughter may share a far greater responsibility in looking after her elderly parents. It is also unlikely that her brother or uncle would provide for her practically should she remain unmarried, become divorced, or even widowed. Arguably, most of these latter issues are contemporary and contextual ones, and therefore not necessarily dealt with by classical Islamic jurisprudence.
To compound the situation further, sometimes a client’s investment property that he says he owns is in fact owned by his wife. If this property is mortgaged, then there is often an additional outstanding loan that was once provided by an uncle, brother or friend, who subsequently has an unofficial equitable stake in the growth of the property. So, you then need to explain to your client that this relative’s ‘loan’ is not actually a loan, but rather it is treated as a partnership share in the property. Things can get complicated.
Or, say for instance you are dealing with a business owner who may be listed as the sole director and shareholder of his company. This client tells you however that he has multiple silent business partners who have decided that they actively don’t want to be listed as shareholders. Of course, if the business collapses, these silent partners would not be at risk if creditors came knocking on the door. However, in the good times they would still expect to be remunerated as equally as the listed shareholder/Partner/Director on the profits and on any future sale of the business. On the other hand, should the shares of the legal business owners be sold, these silent partners have no recourse.
Then there’s the potential estate planning surrounding a second ‘wife’. Without offering any personal judgment, you can probably appreciate from an estate planning point of view that this ramps up the possible complications. I’m not complaining of course. More complications, means more fee-earning, but it’s eye-opening to be in the company of people from all levels of society and to realise that everyone’s life is quite exceptional to them.
There’s no doubt that there needs to be a lot more conversation and study between scholars of Islamic jurisprudence and professionals specialising in estate planning or wealth management. I personally cannot see how ‘Islamic’ inheritance laws as they are currently practiced can be true to shariah in a 21st century British context. Rather, as they stand these laws may well create more societal problems than solve them. Let’s also remind ourselves that there are a total of six classes of potential beneficiaries who can challenge the distribution of an estate. What if one of those classes has a different jurisprudential position to the deceased?
Consider, for example, the average Muslim family with a couple of kids. With assets that are largely made up of a residential property valued in the region of £500,000, they can literally benefit multiple future generations with effective conventional estate planning solutions. They would benefit from the recycling of wealth, which can help them pay for better education, debt relief, setting up a business and much more. Alternative ‘Islamic’ solutions may not do the same.
The British Muslim spending power is estimated to be worth £20.5 billion annually. British Muslims are the top online charity givers and the 13,400 Muslim owned businesses in London alone have created more than 70,000 jobs. Now, it’s time to get smart. Get professional advice on how to structure businesses or investments sensibly and legally, and put in place asset protection strategies that can benefit generations to come.
Mohammad Uz-Zaman is the Director of ADL Estate Planning Ltd. He is a private client estate planning consultant who holds accreditations across regulated financial advice and estate planning. He holds a BSc (Hons) in Psychology & Sociology and an MA in Islamic Studies and is also an Associate Member of the Society of Trust and Estate Practitioners (STEP).