Estate Planning Tools for Muslims

There are four dimensions in estate planning for Muslims:

  1. Faraid,
  2. Wasiyyah (wills)
  3. Hibah (gifts) and
  4. Waqf (charitable)

For Muslims, proper Islamic estate planning can be key to the smooth distribution of assets to their heirs. When a Muslim dies, the Islamic Law of Inheritance, namely Faraid, applies to the distribution of the deceased’s estate. This article will discuss the basics of faraid applicable to Muslims.

What is faraid?

In Arabic, faraid means fixed portions. Technically, the term refers to the fixed portion of shares allocated to the lawful heirs after the deceased’s death as determined by Shariah law.

In Islam, faraid is known as the Islamic law on inheritance. Faraid deals with the distribution of the deceased’s assets to their heirs following Allah’s decree in the Holy Al-Quran and the hadith of the Messenger Muhammad.

Importance of faraid

Following the principle of faraid is vital for Muslims because it ensures that the deceased’s assets are distributed fairly and justly among their heirs.

 In the Islamic context, faraid law:

  • Protect the rights of an individual to own or inherit the estate.
  • Prevent disputes and conflicts among family members and ensure the deceased’s wishes concerning their leftover assets are respected.
  • A balanced economic system that allows free movement and circulation of wealth in Muslim society.
  • Enforces legal means to accumulate wealth and distribute it equitably.

Basis of faraid in the Al-Quran and Sunnah

The rights and portions of the heirs are protected and stated in the Holy Book of Al-Quran in Chapter An-Nisa verses 11, which read:

“Allah commands you regarding your children: the share of the male will be twice of the female. If you leave only two or more females, their share is two-thirds of the estate. But if there is only one female, her share will be one-half. Each parent is entitled to one-sixth if you leave offspring. But if you are childless and your parents are the only heirs, then your mother will receive one-third. But if you leave siblings, then your mother will receive one-sixth – after the fulfilment of bequests and debts…….”

Hadith of the Prophet Muhammad, in which he says:

“Learn faraid and teach it to people because it is part of the knowledge and will be forgotten. It is also the first knowledge that would be lifted from my people.”

Faraid process after the death of a Muslim

The obligations that must be fulfilled are in the following order:

(1) Funeral expenses

The first thing that must be managed is the funeral expenses incurred from the time of death until the burial. These include transportation, washing, shrouding and payment for burial. The average funeral expenses for Muslims will come to a total of RM1,000.

(2) Settlement of debt

The next item to be attended to is the settlement of the deceased’s debt. This is based on a hadith of the Prophet:

“The believer’s soul is kept hanging by his debt until it is paid”.

(3) Bequests or execution of a will

The third thing that must be done before distributing the estate is the execution of the deceased’s will if they left any.

(4) Distribution of estate to the qualified heirs, according to faraid.

After deducting the above three from the deceased’s assets, what remains will be distributed among the heirs by following the faraid formula.

Categories of assets subject to faraid

This distribution (faraid) is divided into two categories:

  1. Immovable properties such as land, houses, and buildings; and
  2. Movable properties, including bank savings, shares, KWSP money, Tabung Haji, insurance, vehicles, and jewellery

The determination of distribution is issued in the form of a Faraid Certificate, which can be applied at Syariah Court with or without the help of a lawyer.

Legal heirs and their entitlement

In verses 11 and 12 of Surah al-Nisa, Allah explains in detail the shares or portions inherited by a mother, father, and wife or husband.

The following table summarises the shares allotted to the different heirs.

 Heirs Share Allocated Condition(s)
Husband 1/2 If the deceased wife leaves behind no children
1/4 If deceased wife leaves behind children
Wife 1/4 If deceased husband leaves behind no children
1/8 If deceased husband leaves behind children
Daughter 1/2 If only one and no son
2/3 If more than one and no son
2:1 Deceased has son(s) together with daughter. Daughter receives half of son’s shares
Mother 1/3 If only mother and father (no children)
1/6 Deceased has children or deceased has 2 or more brothers and sisters
Father 1/6 Deceased has sons(s) (one or more)

The above summary is derived from a literal translation of the verse. However, the portion allocated to the lawful heir can be changed or rearranged, provided it is consented to by all beneficiaries.

How is Faraid different from conventional inheritance law?

Faraid law differs from civil inheritance law in several ways.

  1. Faraid law prioritises certain relatives for inheritance. In contrast, civil law may not guarantee a spouse’s inheritance if not mentioned in the will.
  2. In the context of faraid law, it’s worth noting that male heirs typically receive a more significant portion of the inheritance compared to female heirs. This is a significant difference from conventional law, where gender does not typically influence the distribution of assets.
  3. The critical distinction between faraid and conventional inheritance laws lies in their guiding principles and rules. Faraid law, based on Islamic principles, ensures fair asset distribution in line with the Quran and the Hadith.
  4. Conventional inheritance law, upholding individual freedom, offers more flexibility in asset distribution. Muslims have to adhere to the fixed portion stipulated in the Al-Quran and cannot simply exclude their legal heir from inheriting their property.

Conditions that bar legal heirs from inheriting the deceased’s estate

Two hadiths mention two situations that will exclude a legal heir from inheriting the deceased’s estate:

The Prophet Muhammad, peace be upon him, was reported to have said: “A Muslim cannot be the heir of a disbeliever, nor can a disbeliever be the heir of a Muslim.” (Sahih al Bukhari).

  • Second, where the potential heir killed the deceased. Jurists agree that unjustifiable or intentional killing bars one from inheriting from the victim based on the following hadith:

The Prophet Muhammad, peace be upon him, also stated that “one who kills a man cannot inherit from him.” (Tirmidhi and Ibn Majah).

Managing the deceased’s estate under the Malaysian court system

In Malaysia, the entitlements of heirs under faraid law are not automatically assigned. It’s essential to understand that these rights and allocations must be actively pursued and legally established. If not, the estate will be frozen in baitulmal. (Muslims treasury).

In distributing the deceased’s assets, a person, typically a representative of the deceased, is responsible for being the estate administrator. This appointment requires the consensus of all legal heirs.

  • Section 50 of the Administration of Islamic Law (Federal Territories) Act 1993 mentions that the Syariah court can provide a certificate that details the beneficiaries and their respective shares to the estate upon application by the administrator of the deceased’s estate.
  • The administrator then has to procure a court order, specifically a letter of administration, to gain legal authority to oversee the deceased’s assets and liabilities.
  • Following this, the administrator can distribute the assets amongst the rightful heirs per faraid law.
  • We have previously covered the process of applying for a grant of Letter of Administration

Common misconceptions about faraid among Muslims

(1) Faraid is only for the wealthy.

Faraid applies to all Muslims, not just the wealthy or those with large estates. It’s an essential part of Islamic law, overseeing how a deceased person’s assets are distributed.

(2) Faraid law applies solely to Muslims residing in countries with a Muslim majority.

Faraid is a universal tenet of Islamic law that presides over the distribution of a deceased person’s estate. Its application applies not only to Islamic states but is a universal guiding principle for all Muslims worldwide.

(3) Faraid law is unjust to women.

Contrary to some beliefs, the Faraid law is not unjust to women. It operates on comprehensive rules considering the deceased’s heirs and estate size. Women receive an equitable share, like men.

(4) Faraid law is outdated and irrelevant in modern times.

This is incorrect. Faraid law is a fundamental aspect of Islamic law practised for centuries and continues to be relevant today. It provides a fair and just system for the distribution of a deceased person’s assets, regardless of the size of the estate or the number of heirs.

(5) Allocation of equal shares is not allowed under faraid.

This is untrue, as Islam permits equal distribution of the deceased’s property as long as all the heirs pledge their consent.

(6) Faraid is the only way of distributing Muslim’s estate.

It is essential to recognise that Faraid is not the sole mechanism within Syariah law for Muslims to manage their estate.

The Syariah legal framework offers a variety of other tools, such as hibah (gift) and waqf (endowment), for estate distribution. These can be employed separately or in conjunction with Faraid, provided they satisfy the requirements of each instrument.

Faraid, by default, becomes the method of estate distribution when a Muslim passes away without a will that specifies the use of other instruments

Key points

  • Unlike conventional estate planning, Islamic inheritance planning must abide by the rules laid down by the Shariah.
  • The knowledge of faraid is so important that the Prophet urged Muslims not only to learn but also to teach it to others as knowledge of faraid to be half of knowledge and the first knowledge to be uplifted and that there will come a time when two people will quarrel about faraid, they will not be able to find a person who can settle their dispute.
  • Faraid is the basis of inheritance planning. Some jurists remarked that it is half of knowledge relating to inheritance issues: the other half is wasiyyah, hibah and waqf.
This content was written and reviewed by a lawyer but it does not constitute legal advice. We always recommend engaging a lawyer before taking any legal action.