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King Lear is an elderly monarch, tired of carrying the burden of his kingdom and his royal responsibilities, and desiring a more peaceful life in his old age. He decides to abdicate and to divide the realm between his three daughters; Goneril, Regan and Cordelia. In order to ascertain who will be given which areas of land, Lear conceives a "love-test" for which each daughter must convince their father that they love him the most out of his three children. Goneril and Regan are greedy and false, so they win their portions of the kingdom by flattering Lear.
The king expects his favourite daughter, Cordelia, to win the challenge and thus claim the greatest third of the realm. However, Cordelia refuses to participate in the "love-test" because she realises how essentially shallow the contest actually is. Lear's pride is wounded and he furiously banishes Cordelia from the land, announcing that the kingdom will now only be divided in half between Goneril and Regan. One of Cordelia's suitors, the Duke of Burgundy, politely explains that he does not want to marry her if she has no wealth - however, the King of France agrees to take her as his wife and leads her away. Cordelia is defended by Kent, a loyal servant of the king, who criticises his master's actions. For his efforts, Kent is also exiled. Goneril and Regan observe their father's behaviour as not being uncommon, for even in his prime he was rash and foolish.
Elsewhere in the royal court, the illegitimate son of the Duke of Gloucester is also plotting against his father. Gloucester has two sons, Edgar and Edmund. The latter is illegitimate and therefore the two young men are not given equal amounts of property by their father. Edmund feels that this is very unfair, so he deceives his father into thinking that Edgar is trying to kill him. Gloucester is alarmed; he disinherits Edgar who flees from the court. Determined to hunt him down, his father proclaims him a tyrant and sends soldiers to search the countryside and guard the ports. Edgar fears for his life and goes into hiding on the heath, disguised as a mad beggar named 'Poor Tom'.
Lear is confronted by Goneril and Regan, who insist that he should reduce the number of servants who accompany him. Lear is outraged, and sees this as an attack on his dignity and authority. The insult is made worse when one of his servants is put into the stocks as a punishment. Lear becomes hysterical with rage and rushes out onto the heath in the middle of a violent storm, ranting and raving in madness. Kent joins Lear and 'Poor Tom' (Edgar in disguise) on the heath. Gloucester also attempts to help the king but incurs the wrath of Goneril and Regan, who pluck out his eyes in revenge. The blinded Gloucester is cast out onto the heath, where he encounters 'Poor Tom'. Gloucester has realised the mistake he made when he banished Edgar; in his desperate grief, he attempts suicide. However, he is saved by Edgar, who then reveals his identity and forgives his father. Gloucester is so overwhelmed by joy and remorse that he dies.
Cordelia learns of her father's plight and sends servants to bring him to safety. She arrives in Dover with the French army, determined to re-instate Lear to the throne. The father and daughter are reconciled at an emotional reunion at the French army camp, but they lose the ensuing battle and become the prisoners of Goneril and Regan. Edgar suddenly appears, now disguised as a masked avenger; he challenges Edmund to a duel and fatally wounds him. The two evil sisters have both fallen in love with Edmund and in a jealous rage, Goneril has poisoned Regan, who dies offstage. Seeing that Edmund himself is now dying, Goneril flees and stabs herself with a dagger. Edmund, who is bleeding to death, orders Cordelia and Lear to be killed, but the Duke of Albany (Goneril's husband) tries to save them. He is unable to rescue Cordelia, who is hanged; her death is too much for Lear to bear and he dies of grief. Lear, Cordelia, Gloucester, Edmund, Goneril and Regan are now all dead; Edgar, Kent and Albany must attempt to repair the divided kingdom.