What is the difference between Waqf and Muslim Trust?
The usage, concepts, and principles of "Waqf "or "Wakf " are limited for Muslims, but the concept of Trust is vast and can apply to any individual, whether Muslim or non-muslim. Islamic Trust protects estates (tarikah) for Islamic legal heirs (warith). It may include many types of Muslim Trust used worldwide and differs from one country or jurisdiction to another. Also, State laws may differ regarding Trust in some countries.
What are the different types of Muslim or Islamic Trust?
Different trust types may include, and the most common for an individual and family are revocable (Living Trust, the most popular), irrevocable Trust, Testamentary Trust (can be created under Will), and Discretionary Trust.
How the Muslim Trust or Waqf can be formed?
The Trust could form between an owner called a Grantor and Trustee (one or more persons) or a Trust firm, company, bank, association, or charitable. The only Trust that will stay longer is the Charitable Trust. The other type of Trust, such as an individual or family trust for Muslims, terminates automatically upon successful estate distribution to the beneficiary or beneficiaries as per the Trust agreement completed. Basic requirements and elements of Trusts need to be part of the agreement. The best practice is to include important terms regarding Trust, which will not be limited to revocation, funeral or burial expenses, debt fulfillment (i.e., personal or business debts, zakat, kaffarat, pending Hajj, prayer or fasting), pending Mahr (i.e., Dowry or marital gift to wife), estate distribution methodology, the appointment of Trustees, Guardianship for minor children, Testamentary Bequest provisions if desired, and medical needs in case of physical disability or mental incapacity. Trust becomes irrevocable as soon as a person becomes mentally disabled. The endowment cannot be covered under Trust because it is for giving away gifts to organizations.
What is Pour-over Will? and why do I need it?
There is the belief that if you create Trust, you would not need Will but Pour-Over Will works as a backup for any unfortunate situation. The assets left out of the Trust or waqf can be covered under Pour-Over Will. Trust requires updating from time to time, and there is a possibility that the Grantor or Owner of the Trust dies right before he or she purchased large assets and misses including in his or her Trust which will not be covered under Trust. In such a scenario, your Pour-Over Will play a significant role as a backup estate plan.
Can Muslims create Trust or Waqf in Islam?
You can create Trust, Waqf, or Wakf under the Islamic religion. Laws of Trust (or Waqf) differ from one country or jurisdiction to another. Laws of Trust may differ from Laws of Waqf because Waqf is a purely Islamic concept of Trust. Also, not all countries offer the mechanism of creating Trust and/or Waqf. You can create many types of Trusts (besides individual or family trust) based on your needs. You should consider creating Trust, especially if you have significant personal or business assets. Trust requires more cost and effort upfront than Wills, but it pays off in the end if appropriately established and maintained. In most countries, cultural or traditional influences are prevalent in estate planning goals that may not align with Islamic religious requirements. Trust must meet Shariah compliance in addition to Legal; otherwise, it is not meeting the end estate planning goal for Muslims. You can learn more about Islamic inheritance through free Blogs or by joining a course through Wassiyyah Academy.
What is Islamic Inheritance law? Why is learning Islamic Inheritance law important? How can I learn?
There is a large variation in understanding of Islamic shariah law in modern days. Due to misconception, Shariah is mostly perceived to be harsh, rigid, strict, and non-compatible. In reality, laws are meant to be rigid, whether legal or religious, to keep harmony and prevent public disorder on the land. Islamic law is uniform irrespective of geographical location, but you would see large variations in legal laws. The same Islamic law applies irrespective of your status as American, British, Canadian, European, or Asian. Islamic inheritance law is part of Shariah, which means a path to correct guidance. The wealth of Muslims after death belongs to Allah (Subhanahu Wa Ta aala). It's crisp and clear about Inheritance obligations in the Holy Quran 4:13-14 for Muslims. Islamic law of Inheritance is the most comprehensive law on earth, and its beauty is unknown to many, including Muslims. Muslim law differs from secular law, encompassing a large family tree beyond the contemporary family. Under the law of succession for Mulsim, the primary heirs include Husband (Widower) or Wife (Widow), Sons, Daughters, fathers, and Mother whom no other inheritors can exclude them. Due to this distinction with conventional legal laws, it is utmost necessary for Muslims to know about the inheritance method of deducing through inheritance share calculation. Learning Islamic succession is important because it forms the foundation of Trust or Waqf. Learning will help you understand who gets what after death. Learning does not come without reward because it forms part of devotion. Wassiyyah spent years learning and creating Blogs, Articles, Books, and Courses. The course can give you detailed guidance on Islamic inheritance law (mawarith), including Sources (i.e., Holy Quran, Sunnah, Ejma, Qiyas), Al-Furuz (i.e., Fixed or prescribed shares), Asabah (i.e., Residuary), Agnatic heirs, lineal descendants, Zawul al-arham (i.e., Distant Kindred or through kinships), computation of shares using Awal and Radd scenario, Difference of opinions of Madhab (i.e., Hanafi, Shafii, Maliki, Hanbali). The course is suitable for an individual, student, lawyer, scholar, or anyone currently researching legal laws, whether Muslims or non-Muslims. The course is available at the lowest and most affordable rate of $US10 with lifetime access with many additional benefits.
What is the difference between a Trust agreement created by a Muslim and a non-Muslim?
The Trust or Waqf created for Muslims follows the Islamic law of inheritance (i.e., Faraid), while non-Muslims other than Jewish and Hindus, in general, would rely on legal succession laws. Jewish follows the Jewish Inheritance law, and Hindus in India follow the Hindu succession laws.
Do the laws of Wills and Trusts exist worldwide?
The laws of Wills, on the other hand, do exist for most nations, as per Wassiyyah's research to date. Trust or Waqf's laws are still yet to develop in many countries worldwide. Creating Trust is more complex compared to Muslim Will. There are many things to consider outside the Trust document. You should not use online Free templates that may pose non-compliance risks. You may consider taking professional advice from a tax specialist in addition to a lawyer or an attorney if you have substantial assets.
Which Muslim world countries use the Waqf the most?
The Waqf is not just a legal concept but has been widely used in many Muslim countries, including Singapore, Malaysia, Indonesia, Saudi Arabia, Dubai, Qatar, etc. Wassiyyah provides practical guidelines and information through free and premium blog articles.
In which countries do the Trusts' laws differ from one Jurisdiction (i.e., state, province, territory) to another?
Trusts' laws may differ from one country or Jurisdiction (i.e., state, province, or territory) to another for the United states, Canada, Australia, and some European countries, so your Trust agreement must comply with jurisdiction-specific laws for these countries.
What are the Islamic implications of Trust for Muslims or Waqf?
The Trust agreement is a powerful legal document mainly relying on moral, legal, and religious obligations. The Trust agreement must comply Islamically, meaning the estate distribution must follow Islamic inheritance law (i.e., Faraid), similar to Islamic Wills. Your Trusts must include clauses, legal terms, and Islamic wording appropriately so that the Trustee (personal or corporate) can not avoid adhering to the Islamic faith. Especially for countries where Muslims are a minority, creating Trust can be an option for many.
What is the main difference between Islamic Trust and Will?
Having an Islamic Will (also called Wasiyya, Wassiya, or Wasiat) is excellent, but you can not manage estates before death. Establishing Trust is the best way to handle assets while alive. Also, your estates do not have to go through a long Probate process if you have a legal Trust. A carefully drafted Trust can also minimize taxes (i.e., Inheritance tax, Estate tax, or other Investment tax), especially if you have substantial national and/or overseas assets. Creating and establishing Trust is not as simple as creating Will. Trust requires many things to be in place (including land titles updated) before you say your Trust has been legally established. The term executor is used for Islamic Will while trustee is used for Trust in general.
When do Islamic Wills work best compared to Trust?
Creating Trust will not be worth it for those who do not own significant assets. Then, Islamic will can be the best option because making and maintaining Trusts are complex and expensive compared to Will. Also, not all countries have adequate laws allowing you to create Trusts. Wassiyyah offers exclusive blog articles for Premium and Ultimate members to help you decide between Will vs. Trust.
If you are confused or don't know where to start, please JOIN US to receive your free E-Book "Beginners guide to Islamic estate planning," specially designed for those who seriously want to make their estate plan completed in the easiest and quickest way.
Please feel free to drop your FEEDBACK about this page or overall experience.