Giving away gifts in a lifetime is called Deed of Gift, Inter-Vivos, Hiba, or Hibah. It's a very strong estate planning strategy for Muslims. The donor of Gifts must have the heart's full willingness to make Gifts. Gifts are given for two sole purposes; for the sake of Allah (Subahanu wa ta'ala) for his grace, and the other part is to make the person happy, to help him in distress and is one of the acts of expressing love. In a legal/tax context, the gift tax is important to consider while making a gift.
Wassiyyah has a highly customized solution for Muslims to create their Deeds of Gifts (or Gift Deeds) to meet your legal and Islamic compliance. You can create either Deed of Gifts or Hibah for your family members, relatives, charities, or charitable organizations. However, the Deed of Gift or Hibah is generally used to give away gifts to Spouse, Children, Grandchildren, Parents, or Grandparents to show appreciation for your affection, love, and company with them. If you are planning a Gift for a registered Charity or, Charitable organization, please consult the receiving organization before making such a gift. The reason is that you will be eligible to receive a tax rebate. Do not use the Deed of Gift or Hiba for that purpose. Wassiyyah offers the following types of Deed of Gifts and Hibah for Muslims.
Deed of Gift from Husband to Wife or vice-versa
Deed of Gift from Husband and Wife Jointly owned gift to Children
Deed of Gift from Husband or Wife gift to Child
Hiba (or Hibah) from Husband to Wife or vice-versa
Hiba (or Hibah) from Husband and Wife Jointly owned gift to Children
Hiba (or Hibah) from Husband or Wife gift to Child
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The "Deed of Gift" refers to Hibah in Arabic. The thing transferred refers to Mauhubah or Mauhub in Arabic. The term "Donor" refers to Wahib in Arabic. The term "Donee" refers to Mauhub-Lahu in Arabic.
This "Deed of Gift" or "Inter-Vivos" become legally binding upon endorsement and possession of gift delivery. This document is crucial if you make gifts, and it may save you from any future social, legal, and tax-related issues because it is dated and signed. Donor and Donee also agree and follow the terms in this document. This "Deed of Gift" document serves the legal purpose in the context that "any gift you give in your life must be documented" Wassiyyah ensures that the document complies with Islamic and Legal laws. However, you may be non-compliant if you do not follow what you agree to in this document.
Gift and Bequest are two terms that may have more than one meaning. The gift is used for a lifetime, and Bequest refers to what you make as a part of Islamic Wills or Trusts. Many tax offices and jurisdictions refer to the term "Gift" as the gift you make during your lifetime or after death. However, it's clear from an Islamic perspective that a Gift or Hibah term is used for a lifetime, while Bequest is for after death.
The donor is the person giving away the gift, and Donee is the gift's receiver. However, these terms may differ from one country or jurisdiction to another. The application may remain the same, but the name may differ.
Giving away gifts is voluntary, either from a legal or Islamic perspective. Donors should not consider giving away gifts if he or she is not financially strong and may have a fear of financial issues in their old age. As a Donor, you should assess your financials well before deciding on making a Deed of Gift. However, the Deed of Gift is a strong estate planning strategy for wealthy individuals to save from tax implications. However, it may have gift tax if you make a large gift.
You should know the following seven important things before creating your Deed of Gift or Hiba. Please click HERE to learn more.
Assessments
Tax implications
Types of gifts
Invalid gifts
Delivery of possession
Revocability
Legalization
The Hiba (i.e., Deed of Gift) differs Islamically if it is made in exchange or return, and there are two kinds of Hiba. The "Deed of Gift" is neither Hiba-Bil-Ivaz nor Hiba-Ba-Shart-Ul-Ivaz.
Hiba-Bil-Ivaz: This is not a gift (i.e., Hiba) but a sale, and it is irrevocable (after paid or given) because the Donor gives the gift to Donee. In return (i.e., Ivaz), Donee gives something back to the Donor because of the gift he or she received. so there is an exchange of gifts which is considered a sale but not a gift.
Hiba-Ba-Shart-Ul-Ivaz: This is not a gift (i.e., Hiba) but a sale, and it is irrevocable (after paid or given) because the Donor gives a gift to Donee. In return (i.e., Ivaz) and with stipulation (i.e., Shart). Donee gives something back to the Donor on account of the gift he or she received. so there is an exchange of gifts which is considered a sale but not a gift.
Marz-Al-Mawt: This is a Gift at Death-illness, which is not the "Deed of Gift (or Hiba)".
Donatio-Mortis-Causa: This is a Death bed Gift that is not “Deed of Gift (or Hiba).”
REFERENCES
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