Joint ownership in Islam is a highly debated topic worldwide due to its Islamic implications, especially from an Islamic estate planning perspective. The joint ownership refers to "Almilakiat Almushtaraka (الملكية المشتركة)" in Arabic. Various types of ownership exist, including Joint Tenancy, Joint Tenants, Tenancy-in-common, Community property, etc. The Tenancy-in-common is closest to Shariah compliance than others. Most properties today are in Joint Tenancy co-ownership, in which the right of survivorship comes into play and is by far the best ownership in many situations. This types of joint ownership need a creative estate planning solution; otherwise, it may not comply Islamcially. The other type is the community property in which Husband owns 50% and Wife owns 50% in the legal terms before and after death, so it is the most compliant partnership under Islamic law. However, you must know that most joint owners own the property in Joint Tenancy or Joint Tenants, including bank accounts, houses, lands, recreational properties, etc. In business and entrepreneurship, the joint partnership (i.e., Musharakah) is the model in which joint venture business partners share the profits and losses.
What is joint or co-ownership?
If any property or money in the bank is owned by more than one person, it forms a partnership which may either be Joint Tenancy, Joint Tenants, Community property, Tenants-by-entirety, or other similar. You cannot get away with choosing property types if you own something jointly. If you, one dollar in your joint bank account is under a Joint Tenancy agreement by default that most people do not know or realize.
How can Wassiyyah help me with this?
With estate planning experts, you will get what you asked for! In other words, If you ask for Will or Trust, you will get guidance for only that, not ELSE. Your responsibilities include choosing the right property type and organizing assets accordingly. However, Wassiyyah will help you organize this through our premium blogs and articles for the following.
How to verify the property types you currently own.
How to change the property types.
How to comply with shariah with the joint assets.
How to keep the joint assets but still comply with Shariah.
How does Joint Tenancy or Joint Tenants ownership work?
Say, Husband and Wife own the House in Joint Tenancy. When they are alive, they are an equal partner with an undivided share; say 50%-50% for the sake of understanding, but cannot define actual share in reality. If the Husband dies, the Wife becomes the sole owner of the House. If the Wife dies, the Husband becomes the sole owner of the House. If both die, it will be distributed under your Will or Trust document because of the automatic conversion of your property type from Joint Tenancy into Tenancy-in-common up on the death of all Joint owners.
How does Tenancy-in-common ownership work?
Say, Husband and Wife own the House in the Tenancy-in-common. When they are alive, they agree with 60% owned by the Husband and 40% owned by Wife; however, they can choose any % except 0%-100% or 100%-0%. If the Husband dies, the Wife takes 40% of the share, and the remaining 60% share has to be distributed as per Will or Trust agreement. If the Wife dies, the Husband takes 60% of the share, and the remaining 40% share has to be distributed as per Will or Trust document.
How does Community property ownership work?
Say, Husband and Wife own the House on the Community property. They own the property in a 50-50% partnership by default, and please note that they cannot choose any other % of shares than 50-50%. If the Husband dies, the Wife takes 50% of the share, and the remaining 50% share has to be distributed as per Will/Trust document. If the Wife dies, the Husband takes 50% of the share, and the remaining 50% share has to be distributed as per Will/Trust document. However, there is a big difference here: partners can select whether the remaining 50% share can be distributed as per Will/Trust or has to go through surviving spouse based on the right of survivorship! It must be in the agreement before marriage on which way they like to distribute.
How does Tenants-in-Entirety ownership work?
It applies only to a married couple, similar to Community property. The only difference is that ONE person is appointed for legal purposes instead of both spouses; that is not the case in Community property. Right of survivorship does apply similarly to Joint Tenancy. Tenants-in-Entirety is available for a few states of the USA but not other countries.
What is common among all joint ownership agreements?
All property types agreements provide a mechanism to own properties jointly.
All property types agreements carry the risk from creditors during the lifetime and assets distribution right after debts. All partners share the profits and losses, in other words.
All property types agreements can be used to hold the property jointly, including money in the bank, belongings, cars, houses, lands, recreational properties, etc.
Where do I go from here?
Wassiyyah suggests as below and helps you throughout your journey.
Understand the types of properties you have.
Evaluate the needs based on discussions with experts and your family members.
Note that your estate plan, whether you create Will or Trust, is highly dependent upon the asset types and will not function if you have not organized the property types the way they should be.
This does not stop you from creating your Wills or Trusts; you need to understand the implications.
It is not complicated as you may think, and you can make decisions once you learn about ownership types through Wassiyyah's premium blog articles.
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.
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