Estate planning is the writing of wills and nominations as a means of wealth distribution after one’s passing on. The principles guiding Islamic Estate Planning helps to ensure that the wealth or estate transferred is in accordance with the giver or deceased’s wishes and, more importantly, in accordance with the Shariah yet complying with Singapore’s legal system.
In the absence of wills or nominations, situations arise where the estate of the deceased is not inherited by the rightful heirs or being fought over by surviving family members.
Thus to avoid such unhappy disputes and family woes, it is vital to understand some of the important terms you’ll come across in estate planning for Muslims. Some of the means of wealth and estate transfer as mentioned in Quran and Hadith are:
Wasiyyah (Will)
This can only be done after death and applies to the beneficiaries who are not receiving the Faraid shares. It cannot be used for legal heirs that are distributed the Faraid shares. The maximum amount is one third of the net estate.
Waqaf (Endowment)
This is a form of investment for the Hereafter and it can be done during the lifetime or after death.
Amanah (Trust)
Not much research have been done on this subject. It can be carried out during the lifetime or after death. The present Civil Trust concept is quite similar with the Islamic Trust. There is a need to harmonise the deed with Shariah compliance deed
Harta Sepencarian
It is normally meant for husband and wife. This asset will appear when there is a divorce or death. These are the assets accumulated during the couple’s marriage. Also defined as Jointly Acquired Property.
Hibah (Gift)
This is normally done during the lifetime of the Donor and the beneficiaries can be anyone. There are many forms of Hibah.
Nazar (Vow)
It is a promise made by someone before God. Once a vow has been made, the activity of that vow become obligatory.
Iqrar (pledge)
This is a pledge made by an individual regarding the assets that are in his name. This can also be used in making pledge of his debts.
Faraid (Muslim Inheritance Law)
This is the most common means used by Muslims in estate distribution. It is used after death and specifically on the net estate. The Faraid has many limitations; most believe that they must accept the limitations and that they can do nothing about it.
It is true that estate planning is for everyone, regardless of race or religion. Seek the professional advice of our experienced planners for your estate planning needs. Our experienced planners can provide consultation on issues pertaining to estate distribution, help draft your Islamic wealth/estate transfer documents (Hibah, Wasiyyah) and how you plan to distribute your estate upon death.
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