What the executor and trustee should know about the estate distributions?

Whether we talk about the Executor of the Will or Trustee of Trust, their duty is very vast regarding estate distribution after the testator or grantor's death, depending on the size and location of the estates. It becomes more complicated if you have assets with partnerships located nationally and/or internationally. Having more than one Spouse, multiple marriages, and many children living inside and outside the home country away from your estates. However, the Executor or Trustee must act honestly and diligently in any situation that is necessary and obligatory by law. An Executor or Trustee is responsible for following the legal process and distributing all assets immediately upon the person's death or, depending upon the term of the Islamic Wills or Trust agreement, as every heir becomes an immediate owner of his or her share and has the right to the property. Delaying estate distribution without any reason is the biggest Executor's or Trustee's mistake, which can violate legally and religiously. The most common duties of an Executor or Trustee include getting ready, traveling to the location of the deceased, obtaining the death certificate, being part of the burial arrangement, following probate requirements, distributing estates, being responsible to close the income and/or business tax return and resolve any follow-up issues.

You should be thanking obligations with Allah (Subhanahu Wa-ta-a'ala) for many things as a Testator, especially as a Muslim, because every estate planning element, including creating an estate plan, inheritance, and estate distribution, has the spiritual connections that give more meaning to complete estate planning for Muslims.

If your Executor or Trustee and living out of town, city, or country, the first thing he or she should do is get all documentation photocopy or PDF provided by Testator or Grantor, including the Trust agreement, Last Will, Family Tree, and/or Asset list and travel to the city where Testator or Grantor has died. The executor or Trustee must ensure that he or she has adequate money to cover initial expenses. Family members of the deceased would help him but still, he or she better have a plan for covering expenses.

The executor's duty starts immediately after the Testator or Grantor dies. The executor can voluntarily try their best to attend a funeral where the Execution duties start. Depending on your country of residence, it may take some time to get a visa if your Executor is from overseas. Sometimes, Executors may face challenges obtaining visas or a load of paperwork required to enter the country. To avoid these travel complications, we suggest appointing your Spouse and/or your children as executors because they usually reside close to you.

For females spouse, there is a restriction for a few months to keep for "Iddah" which can further restrict the spouse's duty as an executor, and she has to manage through children and friends around.

Testator writes legally binding paper but usually does not pay attention to selecting Executors or Trustees, and in the end, not the Testator but Executors and inheritors suffer.

Visit hospitals or general practitioners to obtain the death certificate. In many countries, the deceased cannot be buried until a government hospital or general practitioner issues the death certificate. In the case of sudden death, the death certificate does issue once the post mortem completes. The death certificate is usually issued to the closest relatives or an executor. Generally, you have to register the death by presenting the certificate to the local registry office (or other similar, depending upon your jurisdiction and country) in the first week of a person's dies.

After successful issuance of a death certificate and all clear given by the Hospital or general practitioner, inform the mosque for proceeding on burial if not done so. In most cases, you may be arriving at the place of the deceased by the time burial is completed (because burial cannot be delayed for deceased Muslims, and there is no requirement executor or trustee to be present). So you only have to ensure whether the death is properly registered and a death certificate is issued to one of the deceased family members or friends, which is a crucial document you need to get first as an executor or trustee before you can start anything regarding your duty.

The executor will need to confirm whether Probate is required or not or may need partial Probate for some assets. Knowing earlier which assets pass through Probate is crucial. If no assets pass through Last Will, then Probate may not be required, which will reduce 80% of the Executor’s work. Read this "What can and cannot cover under Islamic Wills?" for further insight. If it determines that the Probate is necessary, Executor should collect all information to prepare for Probate (including but not limited to Wills, assets list, inheritors list, and bank account information of the deceased). If Executor is unsure about what to do, he or she can hire local lawyers to assist in probate planning. Hiring a lawyer for Probate is recommended as there is lots of paperwork to go through, and sometimes missing one or more items may delay Probate, which may incur more cost than the lawyer’s fee. Depending on the lawyer, they may charge a flat fee or % (percentage) of the total assets. It will be expensive if you have large estates, so find a lawyer with a flat fee structure or negotiate with a lawyer to optimize cost by reducing fees. Hiring a lawyer will not solve all issues, as Executor is still responsible for providing information and making crucial decisions. Still, it will undoubtedly be helpful with guidance from a lawyer. However, there are neither legal requirements nor the necessity to hire a lawyer or attorney. As an Executor or Trustee, you should be able to handle all this as long as you are reasonably educated. All these are clerical work, and in most cases, an Attorney or Lawyer is not required, but it will certainly be a good idea to hire Attorney or lawyer for Probate processing.

Consult or visit court (or consult Attorney or Lawyer if you have one) to make an appointment for the Probate process. Upon the deceased's death, the Last Will has to pass through the probate before the executor begins the estate distribution. In parallel, the Trustee has to start working on settling Trust assets. Trust settlement can be done without probate processing and judiciary supervision in general. It would be ideal if the Executor of the Will and Trustee of the Trust to be the same person. If there is Pour-Over Will created by the owner, then the minimal estates would go through probate as the majority of assets would cover under Trust.

Executors will need to be in close contact with Beneficiaries (inheritors) as they are the primary source of information Executors may need and keep aware of the progress of the administration of Probate. By the time probate occurs and assets get distributed to inheritors, it may take a few months. Executors will need to complete a number of tasks as below which can vary from one country or jurisdiction to another.

Most people think the Testator's duty ends after creating an estate plan, but that is one big myth, and unfortunately, people do follow the myth. Executors face a difficult time due to this prevalent myth of Testators.

The Executor or Trustee must obtain clearance from the tax office before distributing any estates to inheritors, which covers all tax years to the date of death.

Most people think that Executor or Trusteeship, Probate processing, and administration are legal, but this is not true. It weighs equal to Islam. Most tasks require utmost dedication, due diligence, and hard work. The duties of Executor or Trusteeship were identified and recognized by Islamic jurists centuries ago.

The executor will attend the Probate as per the date determined by court. If court approves Last Will, you are good to proceed with distribution of assets. In some cases, Court may request additional information to prove the Last Will. After Probate approval, Executor can start connecting with beneficiaries and distribute the assets. Executor will need to keep an accurate record of everything he or she does to present to the court after all the assets are distributed.

After successful completion of Probate, This is one of the most crucial task as you need to follow the wishes outlined in the Last Will and the Trust document. There is no single way to tackle the distribution of assets for every situation, and estate distribution strategy may differ in terms of personal, business, or may depend on the circumstances and priorities of inheriting partners. Some inheritors may not has a preference for getting portion, but some may disparately want it. However, There is no cornerstone of placing a particular method or strategy for the distribution of estates, and again, it's all comes down to mutual understanding and agreements among inheritors. We will provide more details on the topic as how to distribute assets.

Lastly and most importantly, Executor and Trustee will need to complete the final income tax return on behalf of the deceased, which is last legal process and follow-up actions to be completed before it says complete. Before that, depending on the location of assets, Executor may have to consult a Tax or accounting firm to find out whether any inheritance, estate, wealth, capital gain or other tax has to pay. Wassiyyah has extensive blog content that the Executor may refer to answer some questions. Refer to BLOGS for taxes worldwide. Tax implications may differ from one country or jurisdiction to another. The testator or grantor should compile some information about taxes and share it with Executors.

Anything and everything you do about making sure your inheritance gets distributed as prescribed in Islamic laws of Inheritance. However, it's not a day or a week process but takes months depending on the size and complexity of your estates. There are many factors to consider when it comes to estate distribution, including but not limited to legality, Judiciary, moral, social, tax implications, and it becomes more complicated if you have a business or overseas assets.

If the deceased left with cash, it's easier to distribute than a house, land, or car. The material properties need a specific strategy to follow. Not one method of distributing works for all situations. The house and land are the most difficult to devise a distribution plan. There are some of the strategies you may follow below.

Tax impact: Before you start deciding about distributing property, you first need to consider the tax impact. There are many countries with no gifts or inheritance tax, while some are. In either case, you may have to pay the capital gain tax, which is usually the difference between what you paid for your asset and what you sold. For example, Some assets will be a tax-free allowance based on the country of your residence. For example, you have a capital property worth $100,000, assuming the Tax-free allowance per person is $200,000. You will not be paying any capital gain tax, estate, or inheritance tax. In another example, you only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (the Annual Exempt Amount). Tax-free allowance may change every year. For example, You bought a painting for $10,000 and sold it later for $15,000. It means you made a capital gain of $5,000 ($15,000 minus $10,000).

Divide: Generally, every heir, regardless of which household he or she belongs to, has a specific share of the total estate. The default is that each part of the estate (like each plot of land, for example) has to divide among all heirs based on respective shares. However, if the heirs mutually agree, the estate could be divided so that one person or family has one plot. In the end, everyone receives his or her respective share as per the inheritance prescribed in the Will. For example, suppose there are a house and cash to divide among inheritors. In that case, one can inherit an entire house with mutual agreement, and the rest can take the money (without violating Islamic inheritance). There is no issue if one inheritor gets little more or less with mutual agreement.

Exchange: One of the biggest issues for migrants is their beneficiaries cannot migrate and own estates other than their home country. There may be two different scenarios. In the first scenario, If inheritors are from different countries, they can mutually agree to exchange the estates. For example, if one inheritor is from India and another from Canada. The deceased left the estates in both countries. Based on the portion of inheritance they can receive as per Islamic inheritance law, they can mutually agree to own the property of their respective countries to get away with the property ownership issue. In the second scenario, If inheritors are from different countries, they can mutually agree that one inheritor from the same deceased country can own the estates and other inheritors from countries outside the deceased country can receive money in exchange for inheritors from the same deceased country.

Rent out: In many cases, dividing the rental property may not be possible. There should be mutual consent among heirs that one or more sharers can use it, or they agree to give it to any heir or any other person on rent and share the rental income among heirs according to their respective shares.
 

Sell out: Determining the value of the house, any of the heirs can buy the home after paying other heirs or sell it to a third person and divide the amount received among the heirs according to their respective shares.
 ​
 Own it: Sometimes, it is impractical to divide property, and the market condition is not favorable to sell it. In this case, one person can own it and pay it off to other heirs through monthly payments, or all heirs own it with their respective share through a Tenancy-in-common agreement as per portion in the Will and rent it out and share the rent among heirs. For example, In the case of agricultural land, Inheritance does not necessarily mean the division of property, but its real purpose is that the share of every heir should be saved and must remain intact. If required, they can keep the larger holdings under some unified arrangement. With the help of modern agricultural instruments and techniques, they can secure better production and benefits like a factory. Therefore, different agricultural landholders can benefit by keeping it in joint ownership. For instance, ten owners can secure and collectively take advantage of producing ten acres of land instead of dividing it into ten small fragments. One heir can sell his share to the other who is ready to buy it. And if all heirs agree, they can even sell the whole land to a third person and divide the value among themselves. You can apply a similar strategy in domestic commodities, buildings, shops, trading goods, and even for all sorts of assets. Another solution to this problem lies in the land consolidation principle, wherein small agricultural holdings are used collectively to get more economic benefits. In any case, depriving any legal heir of his or her share outlined in the Islamic Will would be a great injustice.
 ​
 Mutual decision: You will find no better strategy than mutual understanding without confusion or dissatisfaction. Explore the discussion before making any decision. All problems during the estate distribution are not tricky, depending upon how the executor manages it. You will be able to resolve any concerns through open discussion with heirs. A communication gap may give rise to dissatisfaction among inheritors and lead to court. There will be a situation where people would like to take advantage of building the financials, but you can resolve this with your common sense and some advice from friends or other relatives without revealing the fact. The executor can consult professionals if needed for advice. The executor runs the show and drives the discussion. As an executor, you better review some related literature on how to deal with a different situation.

Once the estate distributions are complete, the Executor will have to appear again in Court to present that all the obligations are met as per Last Will. The Court will verify, comment, follow up on actions, and eventually close the Probate.

Some of the tasks will still be pending if you are the executor and guardian of the Children. It may take a few months or years before you say Executor's duty is over.

Thanks to all Executors and Trustees for their dedication and hard work. Do not think that you are Testator and can never be an Executor. Someone from your family member may put your name as an Executor knowingly and unknowingly. It's reciprocal. You are a Testator for your estate plan and Executor for others' estate plans.

The executor can charge reasonable expenses for the administration of work, especially if Executor is not a close relative or someone who voluntarily accepted responsibilities. You can visit your tax or revenue office website to find out the fees schedule based on your country and jurisdiction that Executor can charge if Executor needs to charge for administration.

Terms & 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.