In Islam, specific principles and guidelines exist for Muslims to manage their wealth and estate. Understanding these principles is essential for Muslims who wish to follow the teachings of the Al-Quran. This article will explore key elements of one of Islamic estate and financial planning known as Hibah.
These principles of estate planning exist not only as a guide to individuals but also as a means of ensuring justice and fairness in the distribution of wealth. The following discussions will provide an in-depth look at elements of hibah, their importance, and how they are applied in the everyday lives of Muslims.
In Islamic estate planning, hibah is a benevolent contract underlined by a distinct concept of an offer (ijab) and acceptance (qabul). Hibah weaves an unselfish relationship between two parties: the donor and the donee.
As per the hibah agreement, the donor willingly transfers the possession of their property to the donee. What sets Hibah apart is the absence of any expected return or compensation from the donee to the donor.
“But if they give up willingly to you anything of it, then take it in satisfaction and ease.”
Surah al-Nisa (4)
According to a Muslim scholar, Tanzil-ur-Rahman, hibah means “the making of another person the owner of the corpus of the property without taking its consideration from him”.
In short, hibah is a unilateral contract by which a person, during their lifetime, transfers their property with immediate effect and without consideration to another person who accepts it. Simply put, a hibah is a gift made by a Muslim to another person.
The following evidence undoubtedly proves the legality and encouragement of hibah in Islam:
“But if they, of their own good pleasure, remit any part of it to you, take it and enjoy with right good cheer”.
“Exchange gifts so that you may love another”.
“Help another in righteousness and in piety.”
The donor must be the legal owner of the gift, have reached puberty, and possess the property right during the time hibah is made. A donor cannot gift something which they have yet to be an owner of.
The person receiving the gift can be any person regardless of age, sex, and religion, and he must be legally in existence at the time of the gift. No hibah can be made to an unborn child.
(3) The subject matter of hibah (the gift)
The gift must be of something with value and recognised by Shariah. It must be halal and not forbidden by Islam, such as gifting stolen property or forbidden materials such as alcoholic drinks.
(4) Expression of hibah (offer and acceptance)
The expression in hibah signifies the selflessness and goodwill of the donor, as they willingly give away their property or asset to benefit the recipient without any strings attached. Examples of hibah expressions include the following:
“I made a gift of this thing to you, or I made you the owner of this thing.”
“Now, I gave you a gift out of my property and had you already collected the gift, then it is yours.”
The categories of hibah in Islamic estate planning include conditional hibah (hibah mu’allaqah) and unconditional hibah (hibah mutlaqah). These categories provide different ways of distributing wealth and assets during one’s lifetime, ensuring that the donor’s intentions are fulfilled and their wealth is used following Islamic principles.
All Muslims can use Hibah to distribute their wealth to whomever they desire. It is highly recommended that the following person(s) use Hibah:
A hibah, akin to a gift, can be revoked under two circumstances. These include:
Essentially, a hibah remains revocable until the contract is fully fulfilled. However, there is an exception to this rule. Hibah offered by parents or grandparents to their children/grandchildren can be revoked at any time, barring two exceptions:
By planning and choosing the right instrument for asset distribution, such as Hibah, you can ensure a smooth transfer of your assets and minimise potential conflicts among beneficiaries. Estate planning allows you to provide for your loved ones and ensure that your assets are distributed according to your wishes.
It is advisable to seek professional advice to ensure your assets are distributed according to your wishes. Consulting with an experienced estate planning lawyer or financial advisor can provide you with the necessary guidance and expertise to make informed decisions.
The answer is yes. Hibah can be made to non-Muslims. In Islam, the general rule provides that non-Muslim heirs have no right to inheritance to property belonging to Muslims. However, hibah is an exception to the above rule. Hibah can be utilised by Muslims with non-Muslim parents or relatives to gift their assets during their lifetime.
No permission from their heirs to gift their property to others is required. A person of legal age, sound mind and legally capable of creating a hibah is free to dispose of his property of choice to anyone at their discretion.
Unlike wills (1/3 of one’s wealth) and faraid, there is no specific allocation and limit for hibah. A donor can offer any amount or any assets (regardless of the amount or value) to any persons they wish during their lifetime.