Updated: Jun 30, 2023
We have designed articles and topics that help you create a smart estate plan. We encourage reading all tips and advice designed specifically for Islamic Will and Trust. You would like to create a Will quickly which is fair, but you should know a few more things before considering your estate plan to be practical. There is no estate planning challenge if you have estates in one country or Muslim majority countries, but if you live and have estates in a Muslim minority country would pose obstacles to the validity of Sharia law. You do need to worry, and we have suggestions for you. Your estate plan will work if you read and follow through with our topics.
Giving gifts is not only encouraged but emphasized many times in the Holy Quran as well as in the Book of Hadith. Gifts is a very broad concept, However, what we talk in this article is about making Gifts in the context fo estate planning.
In regards to the Gift made after death (i.e. Testamentary Bequest), there is specific guidance given in Hadith. The Bequest (Wasiyya) in favor of an individual who is automatically entitled to receiving a share of the estate, such as one's spouse, children, and parents, is not valid. The Hadith of Sunan Tirmidhi, no: 2120 narrated by Sayyiduna Abu Umama al-Bahili, states “The Messenger of Allah (Sallallahu Alayhi Wasallam) said in his historic sermon (khutba) of his farewell hajj (haj al-Wada): Verily Allah (Subhanahu Wa ta'ala) has given each rightful person their right, thus there is no bequest in favor of an inheritor.”. In other words, Allah (Subhanahu Wa ta'ala) has already fixed and allotted the shares of those who are entitled to inherit from one's estate and so, Muslim can not make a Will in their favor, one will be going against the shares fixed for them in the Holy Quran and Sunnah. However, if one wished to make a bequest/Will for a non-relative, or for a charity, then this would be allowed and rewarded, but only up to a one-third of the total wealth is permitted. The remaining two thirds will be left to be distributed amongst the relatives according to the fixed shares prescribed by Allah (Subhanahu Wa ta'ala). If one does not make a bequest of up to one third of the estate, then all of the estates will be divided between the surviving relatives. The Messenger of Allah (Sallallahu Alayhi Wasallam) forbade from making a bequest of giving ones wealth in charity which is more than one third, and regarding a third also, he stated: “And a third is also more”as per Hadith no: 2116 of Sunan Tirmidhi.
Even though, you do not want to make the Testamentary Bequest, we strongly suggest to include at least three Muslim charitable organizations to be listed in your Will and Trust due to following reasons.
If no heir is alive or available to take inheritance, your estates will go to government.
If there is a residue left to give it to Bayt Ul-Mal as per RADD case when total Residue is less than 100%, the residue will go to government instead of Bayt Ul-Mal (i.e. Islamic Treasury) due to no provision made in the Will.
You as a testator, would be liable for non compliance to Sharia due to the inheritance distribution do not happen according to Islamic law lack of missing Muslim organizational details.
There is a difference between Gift (Hiba), Bequest (or Wassiyyah), Legacies and another form of Gift is Sadaqah. The life time gifts in legal term called as Inter-vivos and Testamentary Bequest are simply called Testamentary Gifts.
Lifetime Gifts: A person gives in a lifetime called a Gift (Hiba), For example, if someone is giving away House during a lifetime is called a Gift. There are no restrictions on giving away gifts during your life as a Shariah perspective as long as your family members and inheritors are in the same mind as you and not putting them in bad situations. In a legal term the life time gifts are called as Inter-Vivos Gifts. The word "Inter-Vivos" is a Latin word that means "between the living" is a legal term referring to a transfer or gift made during one's lifetime. Inter-vivo gifts are the most Shariah-compliant way of giving away lifetime gifts. If you are giving gifts to government, registered charitable organizations, mosques, worship places, government, ecologically sensitive land, cultural lands, etc. then the majority of countries have the rules of allowing the donor to claim tax credits. In general, you may receive the tax credit up to 50% or more of the net income of the year. This is one of the best way to minimize your tax by giving away through Gifts.
Testamentary Bequest: A Gift written down in the Will to non-heirs is called Testamentary bequest (or Wassiyyah). For example, if someone says in the Will that I am giving away of my one-third (or less) estates after my death, then it is Testamentary bequest. Legally, you may give away gifts to inheritors, family, or relatives in the Will (subject to Gift, Inherithace, estates, Wealth or Transfer tax in some countries), but it is not valid to include giving away gifts as a part of the Islamic Will to the inheritors as per Sharia. However there is no issue if you are giving away gifts to charitable organizations or for wellbeings of poor or maintenance of Mosques or worship places through your last Will. This kind is not the Gifts but considered as a Charity in Islam. You can not give more than one-third of charity as per Shariah. There are different opinions that you may give more based on situations and circumstances. You should consult knowledgeable Islamic Scholar if you intend to give more than one-third in Charity as a part of your Will.
Bequest, Legacies and Sadaqah: If you are giving away items or properties, which is called a bequest, and you are giving away cash, which is called Legacies. Gifts also can be in the form of Sadaqah (Charity) and Hadiya. Sadaqah is the volunteering act in Islam. Sadaqah has the root word 'Sidq', which means 'Sincerity', and so, the act of Sadaqah is considered 'Sign of sincere faith.' Sadaqah not only includes money or property and also, any kind of good actions, maybe as small as 'Smile' or 'Kind word' out of love, showing compassion and generosity. Another sort of Gift is in the form of 'Hadiya' is a Gift given to honor recipient.
Gifts documentation: Deeds of Gift, Declaration of Gifts, etc. are the formal documents that profoundly affect the enforceability of the Gifts. There are two types of Deeds of Gift; one is revocable, and another is irrevocable.
Revocable Gifts may not be an issue legally. However, it does not meet the Shariah compliance as it leaves holes for Gifts to be returned back to the donor if requested.
Irrevocable gifts are the ones they meet both legal and Shariah compliance. This type of Gifts is real and irrevocable due to its nature of binding legally. Since Deeds of Gift document is used for giving away gifts in a lifetime, it meets the perfect shariah compliance.
There is a specific guideline for making gifts in terms of shariah, and legal terms, and some of the key points you should keep in mind before making decision.
Following are the minimum criteria for making gifts.
You must be sound mind and adult for making any Gifts.
Gifts or Charity to be made afterlife in the Will should not exceed one-third as per Sharia. But no legal limitations except tax consequences.
Gifts may be material that includes house, vehicle, land, cash, gold, silver, belongings, or any kind and nature of the property that you must not include as a part of Islamic Will even though it is legally valid.
The donor of Gifts must have a full willingness from the heart in making Gifts. Gifts are made for two solely purposes; for the sake of Allah (Subahanu wa ta aala) for his grace and other part is to make the person happy, to help him in distress and is one of the acts of expressing love.
You need the prior consent or acceptance from inheritors on making especially larger Gifts.
You can not take "Advantage or Benefit" once you gave away lifetime Gifts to your family members or relatives. For example, you have given away a piece of land to your Son. You are claiming the tax credit from the government for this piece of land, which your Son is not aware of, which is contrary to the Gifts concept; instead, your Son is only eligible for tax credits from the piece of land given to him.
Verbal gifts are not valid. Your gifts must be documented, registered or some sort of written paper that I am giving so and so gift to so and so with all my sound mind and heart.
You can not take away gifts once you have given them.
Gift receiver must have full possession, power control, and authority of the Gifts to enjoy, take the benefits out of it, rent it out or sell it; otherwise, it does not consider as a Gift. For example, possessions or giving ownerships may establish through giving keys, leaving no obstacle from donor or other inheritors to the gift receiver for residing or renting a property, etc. Often, a person tells verbally to give away Gifts but still live in the gifted property and not give possession, which is not a valid gift.
The Gifts given must be free from any conditions meaning if I am giving away Gift and putting a condition of my death, which is not a valid gift in terms of shariah or legal terms.
There is no bar on giving away lifetime gifts equally to all children or divide the share as one-half to the daughters than to sons. There is a difference of opinions on giving away lifetime gifts to children among different Islamic jurisprudence and scholars and so, suggest to seek advice from the knowledgeable Islamic scholars.
You can give away one-third of your estates as a part of your Will as per agreement with major Muslim scholars. However, giving away gifts as an afterlife charity (i.e., Testamentary Bequest) to an individual may have tax consequences upon transfer. If you are making Gifts to Charitable organizations, then you may have some tax relief. Please see below a few examples extracted from International estate planning guide to get a general idea. You should consult legal or estate planning firm before making any Testamentary bequest related decisions due to the complexity and dynamic nature of legal laws.You can review the tax related information by clicking on the link below.
You can get the most up to date tax guide by visiting here. We are neither affiliated nor representative of any third party links or services listed on our website. We haven’t independently verified the third party content, and you agree to visit third party content with your own risk for any misinformation or incorrect information.
You can do further customization by adding specific gifts you would like to make. For example, if you would like to make a gift of one house out of three houses you own. You are always free to list the itemized lists of your Gifts in your Will or Trust. However, we did not provide this kind of provision through our service, and there are several reasons as follows.
One of the challenges of listing a house in your Gift is if you have sold your house and did not change the Will or Trust, then it becomes a big issue for an executor to deal with estate distribution unless specific provisions contain in the Will or Trust. Another example is a vehicle. If you have a vehicle part of your Gift in the Will or Trust, but you lost your car in the accident, your Will or Trust needs to be updated. Also, the cost of a house or car fluctuates greatly, and what you estimated today may not be the same. House price appreciates, or Car value depreciates. Your one-third of bequest may exceed, and all estates reduced proportionally to make it one-third, and so, all these dynamic factors need to be taken into account in your Will if you list specific gifts.
The listing Gifts sometimes create issues with the disagreement among the heirs, and that invalids the Will or Trust during the estate distribution.
It's easier and simpler if you can include your Gift percentage to make it a total of less than 33%. This listing method offers lots of flexibility to an executor by making choices on estates for bequest and, allowing the feedback from inheritors at the same time. it's a win-win situation for all parties, including executors, inheritors, and receivers of gifts. While you choose to make a bequest, ensure the total bequest to be less than 33% in the table below.
Terms and Disclaimer: We are not a legal firm, and you agree to our terms and conditions. We are not liable for any damage or loss if you incur through our advice or service, and our advice or suggestions must consider as a reference only. Information provided here is copyright protected by International intellectual property laws. You can use our guidance, content, and service for your benefits but can not utilize intending to gain commercial advantage without prior written permission. We have used many third party links for you to refer—however, We neither affiliates nor represent any services listed or links provided on our website. You can click on below to refer to the detailed Terms, conditions, and our Privacy policy.