In the name of Allāh, Most Gracious, Most Merciful

Distributing the Deceased's Estate

بِسۡمِ اللهِ الرَّحۡمٰنِ الرَّحِيۡمِ

DISTRIBUTING THE DECEASED'S ESTATE

 

The information contained in this article is for information purposes and contains my own personal views on some matters and does not constitute legal advice.

Inheritance issues are becoming an increasing problem amongst UK Muslims as the value of estates upon death have increased over the decades. Such issues split families apart sometimes for a life time and sometimes for generations. It is up to each individual to take measures to manage his esate including writing a Will so as to try to avoid family disputes after his death.

From an Islamic perspective it is important to distribute the inheritance as soon as possible after the death of an individual because the legal heirs are the owners (tenants in common) of the deceased's esate from the time of his death. Delay in distribution of the esate can lead to complications if one or more of the heirs die before distribution of the estate. When a man dies the distribution of the esatte should not be delayed until his wife dies (and vice versa). Appropriate measures should be taken if there are any missing heirs or if the deceased left behind a pregnant wife with a potential legal heir in utero or another woman carrying an unborn potential legal heir (e.g. father's wife or brother's wife). There may be restrictions placed by local laws on early distrubution of the esate.

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With so many Muslims dying you may find your self in a situation where you are either a named executor in a Will or someone in your family dies without leaving a valid Will and you may wish to act as administrator of his/ her estate to try to ensure the deceased’s estate is distributed according to the commandments of the Almighty.

The deceased person will have died either leaving a valid Will or died without leaving a valid Will (died intestate).

If the deceased died with a valid Will in place then there will be an executor named in the Will, this may be you.

  1. When you go to register the death at the registry office of your deceased relative to get the Certificate of Registration of Death (BD8) make sure you get several copies as you will need them when managing the estate of the deceased. Photocopies of the death certificate (BD8) may not be accepted by some institutions you need original copies.
  2. As the executor of the deceased’s Will you are effectively the manager of the deceased’s estate. If you are a joint executor then you must act in accordance with the other executors of the Will.
  3. As the executor, you must carry out the wishes of the testator as detailed in the Will and take into consideration any requests in the Letter of Wishes, if the deceased has left one. The Letter of Wishes is not legally binding in English law like a valid Will. However, from an Islamic perspective, the Letter of Wishes can be considered as part of the Will providing it fulfills the criteria on an Islamic Will.
  4. If you are the named executor you will need to apply for probate by completing the Probate Application Form (PA1). If there is more than one named executor without priority then all of them must agree as to who makes the application. Up to 4 executors can be named in a Will (English law) and on the application for probate.
  5. Probate is the judicial process that officially accepts the Will of the deceased to be valid and issues a grant of representation which gives the legal right to deal with the deceased’s estate.
  6. Applying for probate requires evaluating the estate for which you will need details of bank accounts, insurance policies etc. Although joint tenancy agreements do not form part of the probate, such properties and bank accounts must be included in evaluating the deceased’s estate. The inheritance tax form has to be completed even if no tax is due. You must complete the appropriate inheritance tax form (valuation of the estate) which is available online. If inheritance tax is due this must be paid in advance.
  7. Send the completed probate application form together with an official copy of the death certificate, three copies of the original Will (if there is a Will), the appropriate inheritance tax form and the application fee to the local Probate Registry office. For Manchester, the address is Manchester Civil Justice Centre, Ground Floor, 1 Bridge Street West, Manchester M60 9DJ, tel. 0161 240 5701 
  8. For Scotland.  A Grant of Confirmation is the Scottish equivalent of a Grant of Probate.There are considerable differences between applying for a Grant of Confirmation in Scotland and applying for Probate in England. The deceased’s representative can apply by completing an inventory form C1 together with the necessary paperwork to the Sheriff Court. C5 (Return of estate information) must be completed for excepted estates where no inheritance tax is due. Estates that exceed the nil rate band must complete a full inheritance tax return, form IHT400. Executor-datives should not distribute any of the estate to those entitled to it until a period of 6 months has passed since the date of the death. If any mistakes are made, the executor is held legally responsible. The executor-dative must obtain a bond of caution from an insurance company to ascertain they will distribute the estate in accordance with the Succession Act. This is lodged at the Sheriff Court along with the inventory form C1. Since the Scottish Succession law is somewhat more complex than English law it is probably better to seek legal advice althogh not a must.
  9. For Scotland. If there was no Will left by the deceased, anyone entitled to inherit or the next of kin must apply for Confirmation. A petition for the appointment of an executor-dative is lodged with the Sheriff Court. The Succession Act 1964 (Scotland) will determine the distribution of the estate. For a small estate (£36,000 or less) click here; for large estate (over £36,000) click here.
  10. If there is no Will and you want to be the administrator of the deceased’s estate then you can apply for this. You should get an agreement from all the heirs, preferably in writing, that they all want you to be appointed as administrator. This written agreement can be attached to the application form and you should make it clear to all the heirs before they sign the agreement that you will be acting and distributing the estate of the deceased according to the commandments of Allāh  (). If the heirs do not agree to this then there is little point in acting as the administrator of the estate.
  11. If you are the named executor and the Will violates the commandments of Allāh  () then you do not need to accept the appointment of the executor, you can refuse. However, if you start acting as the executor then you will be considered to be the executor in English law and in Islamic law.
  12. Is it necessary to apply for probate in all cases? No. If the value of the estate left behind is so small and the deceased did not leave anything solely in his/ her name and there is nothing that requires a legal authority to sell it, then no probate is required. Because of covid-19 processing probate is taking much longer than usual.
  13. The probate high court will issue a grant of representation to the applicant which will be either “grant of probate” if there was a valid Will or “grant of letters of administration” if there was no valid Will.
  14. The grant of representation is a legal document that confirms the authority of the executor/ administrator to deal with the deceased person’s estate.
  15. If the estate is valued above the inheritance tax threshold, the estate contains complicated assets or if the estate is insolvent then it is probably a good idea to seek legal advice.
  16. What if someone in the family is trying to cheat others of their inheritance via fraud etc? If you think someone in the family is applying for a grant of representation with the intention of frauding/ cheating others then you can stop the issue of a grant of representation. This is called a caveat, it stops probate from going ahead.
  17. Applying for a caveat involves sending a signed request to the local Probate Registry with full details of the deceased including name, address, the exact date of death and place of death, details of the person applying for caveat together with the application fee.
  18. As the executor or administrator of the estate, it is your duty to value the estate, determine the heirs and then distribute the estate accordingly. It is important to seek appropriate advice before any distribution of assets as mistakes can be difficult to rectify.
  19. From an Islamic perspective assets are anything that has a value:
    1. money in bank, building society or savings accounts
    2. houses and land, including farmland
    3. businesses, or business assets, owned by the deceased (or a business partnership of which they were a member)
    4. investments such as stocks and shares, including family shares, digital assets
    5. personal belongings, including jewelry, antiques and other collectibles
    6. furniture, fixtures and fittings in a house
    7. motor vehicles
    8. pensions that include a lump sum payment on death (as opposed to an ongoing annuity to a surviving partner), a full SIPP (fully self-managed)
    9. assets in a trust from which the deceased benefitted
    10. pay-outs from life insurance policies
    11. foreign assets held abroad including foreign bank accounts, property or shares
  20. Note that under English/ common law the estate of the deceased can be transferred in a number of ways which is not the same as under Islamic law:
    1. By direct transfer (e.g. beneficiary designated on a bank account, life insurance policy)
    2. By joint ownership (e.g. right of the surviving spouse in a joint tenancy agreement in a property)
    3. Through probate
    4. Through trusts
    5. The right of election in some jurisdictions
  21. Note that the legal heirs are owners of the deceased's estate at the point of death of the deceased so it is important to distribute the estate as soon as possible.
  22. The executor/ administrator does not have any discretion as to how the estate is to be distributed that has already been determined by the commandments of the Almighty.
  23. If the deceased has written a valid Will which violates the commandments of the Almighty must the executor follow the wishes of the Will writer under English law? Under English law if all the beneficiaries agree the original Will can be effectively rewritten, if there is a minor child then a court order is necessary to "re-write" the will. This "re-writing" of the original Will is called a Deed of Variation. No solicitor is required for this process. The beneficiaries of the deceased can change the way the assets in the Will of the deceased are distributed for a period of up to 2 years after the date of death by way this Deed of Variation.
  24. When acting as executor/ administrator you should not make a charge on the estate for your duties unless it is written in the Will, in which case this must be included as part of the bequest and limited to one-third of the net estate after payment of funeral/burial expenses and any debts. Also note that a legal heir is not entitled to a bequest under Sunni Islamic law.

Note the information provided above pertains primarily to a Will written in a Will format. If the deceased left a Will in the form of a Will trust (testamentary trust) the rules are somewhat different as the executors are effectively trustees of the net estate of the deceased. The trustees adhere to a different set of rules compared to an executor of a Wil.

Dr. A. Hussain (author of The Islamic Law of Inheritance and The Islamic Law of Wills and Inheritance)

Feb 2021

 

The information contained in this article is for information purposes and contains my own personal views on some matters and do not constitute legal advice

25. How do we divide up the family house for inheritance? If the house is sold where will the deceased man’s widow live?

In the traditional nuclear family structure of a Muslim family when the head of the family, the man died, his wife would be looked after by the close male relatives. The Islamic law of inheritance is based every much with the nuclear family structure in mind. However, in this day and age the traditional nuclear family has disappeared, and when the man dies his widow is often left to fend for herself. More often than not the main asset in the deceased man’s estate is the family house. If this is sold to distribute inheritance shares where will the wife live, her inheritance share is only 1/8 in the presence of any children (or agnatic grandchildren).

One solution is to transfer the property into a SPV. If the spouse relict becomes the legal owner of the family property under law of "right of survivorship" then although she has the legal title to the property under English law, according to Islamic law all the legal heirs of the deceased have a share in the property. Joint tenancy agreements with the clause “right of survivorship” must be avoided from an Islamic perspective. Such an arrangement violates the rights of the legal heirs of the deceased. Even if the deceased made a Will bequeathing his share to someone other than the co-owner it would have no effect under English law The marriage contract in Islām does not provide for the mixing or intermingling of properties of the husband and wife. From an Islamic perspective upon the death of an individual, all his legal heirs become tenants in common of his whole estate with each legal heir having a definite share in the property.

Under English law you cannot have more than 4 individuals on the title deed of a property. If the number of legal heirs is 4 or less than the property title should be transferred into the names of the legal heirs under a  “tenancy in common” agreement whereby the proportion owned by each heir is directly proportional to his/her share of the inheritance. If there are more than 4 legal heirs and they decide not to sell the property so that the deceased widow can continue to live in the family house or for any other reason then one method which can be used to distribute the inheritance is to transfer the property into a Special Purpose Vehicle (SPV), providing all the heirs agree. A SPV is a limited company registered with Companies House in UK. Each legal heir of the deceased will become a shareholder in the SPV in direct proportion to his legal share of the inheritance. You should seek legal advice from a specialist solicitor if you decide to go down this route. The articles of association written for a SPV need to be customised for each particular SPV, see attached PDF as a sample. A SPV could also be used when dividing inheritance for a business.

Dr. A. Hussain (author of The Islamic Law of Inheritance and The Islamic Law of Wills and Inheritance)