I prepared this guide in order to help educate American Muslims, particularly those in California, about doing an estate plan based on a last will and testament. Many people will do their own Islamic Will, this is particularly true immediately before traveling or before some sort of a life event.
However, the last will and testament, done as an “Islamic will” is a type of plan that has significant limitations. It only covers particular types of property and is subject to a court process known as probate. Furthermore, people tend to arrange their property in such a way that planning through the last will and testament frequently does nothing at all.
Now I want to be absolutely clear: I am not advocating against a last will and testament. In fact, when I do an estate plan for a client, a last will and testament is part of the plan 100% of the time. What I am saying though is a “will-based” plan, where the major provisions of the plan are set forth in a last will, is frequently going to be flawed.
Here are a few examples.
1) Requiring too much interpretation
One of the things that I have heard from Muslims is that in the United States, all you have to do is write down “I want everything distributed in accordance with the sharia” and that is enough as an Islamic Will. This is wrong.
As a general matter, courts will not attempt to interpret brought terms like that. American Judges are neither trained nor particularly interested in determining what Sharia is and is not. Since an Islamic Will is supposed to follow the Sharia, your heirs are going to be stuck. Unfortunately, many people do not realize that there are issues beyond their shares of inheritance that are relevant in estate planning. How a person receives in terms of the inheritance share is usually fairly easy. However, courts may not do it and even if they did, there may be legal reasons for them to not distribute your assets based on the Islamic rules of inheritance.
Ali creates an Islamic Will by hand. This is called a “holographic will.” Ali makes his wife Bilqis his executor and asked that everything be distributed based on the Sharia.
Based on a prior appellate court opinion, a judge in California will say the term “Sharia” cannot be interpreted. Therefore, the estate will not be distributed based on the Islamic rules of inheritance.
2) Not properly organizing property
It is important to not simply look at how property is going to be distributed, but how it is owned at the time of distribution. Frequently, people will create an Islamic Will that may be fine as far as distribution is concerned but it just won’t go as planned.
This is because property ownership is generally manifested in documents. Property distribution may also be manifested in documents and those documents, such as beneficiary designation forms, may trump what a will says.
Many people may write an Islamic Will and beneficiaries may find that this was not a useful exercise.
Ali and Bilqis own a home together as joint tenants with right of survivorship. They also have their bank accounts jointly. They have named each other beneficiaries of their respective retirement plans. Under these circumstances, if one spouse dies, everything will pass to the other spouse.
In ordinary circumstances, this is fine. However, it does not respect the rights of the parents and the children who also have the right to inheritance under the Islamic rules. Therefore, this type of distribution is actually prohibited in Islam even though the actual last will and testament followed Islamic rules.
4) The “I love you” Islamic Will
In Amerian culture, as well as the culture of much of the world, there is this expectation the surviving spouse gets everything. Some Muslims then assume that after that, it is two shares for the boy and one share for the girl (that is the rule of inheritance almost everybody knows). This is incorrect. In fact, doing it this way would cause a massive injustice to people who are rightful beneficiaries under the Islamic rules of inheritance. For more on this, you should read more about the treatment of orphans in Islam.
In Islam, several people beyond “immediate” family may be beneficiaries. Rights to inheritance are ordained for a set group of people beyond the surviving spouse. This includes parents, children and sometimes siblings and others.
3) Not naming all beneficiaries and shares
The Islamic rules of inheritance has a tiered system of distribution giving priority to “primary beneficiaries” over “contingent beneficiaries. A lot of the times, people do not necessarily know who the actual beneficiaries are and what they get. The people who Islam mandates get an inheritance and who you may think should get it could be different.
Muslim parents are always entitled to an inheritance, as are children. In Islam, adopted children are not treated the same as natural born children for all purposes. You should read my comprehensive guide to Islamic Inheritance for more.
It is important to know with specificity who the beneficiaries are and what it is they are supposed to receive.
Elyas creates an Islamic Will. He has one daughter, a wife, and his mother. His father has passed away. He also has three brothers. His will names his wife and daughter as beneficiaries. He forgets to name his mother and also does not realize that his three brothers also inherit a small portion each in this situation.
As a result, Elyas’ Islamic Will is done incorrectly.
4) Too much exposure to the surviving spouse
The biggest asset that most families have is the family home. In many cases, it’s worth more than anything else. This can add complixity for families. You often cannot just give it to the surviving spouse. That would be unfair. Then what do you do?
More people owning property exposes that property to more potential future creditors and drama. Children will grow up and their lives become more complex. Their drama, including divorce, business disputes and so forth, can become the surviving spouse’s drama.
What a good estate plan would typically do is consider the fact that the surviving spouse will need to live in a home as he or she ages, while at the same time, respect the inheritance rights of the other beneficiaries while not exposing either of them to unnecessary risk.
Ali owns a home. He has what he believes is an Islamic will. His wife, children and parents get him home after he dies. All of them now own a portion of the home. All the family members agree that the surviving spouse can continue to live in this home and the family relationship is harmonious.
Years later, one of the children gets divorced and a former daughter-in-law needs to collect assets from that child. She decides to foreclose on the house.
5) Making administration too expensive
California and other states have a process of estate administration known as “probate.” If you needed a deceased person’s signature to transfer property from one person to another, that would cause probate. This means that there is a judicial process that takes a lot of money and time. It may easily last over a year in many cases.
Probate administration fees are mostly based on a percentage of the estate, with a smaller percentage for larger estates. Attorney’s fees and executor fees as well as “probate referee” fees are based on a percentage of the estate.
It’s common for probate fees to go into the tens of thousands of dollars in normal circumstances. If there is a dispute, these could easily take up most of the estate.
A probate typically takes place if an individual passes away with assets in excess of $150,000 (in 2015). Probate fees are based on the gross value of the estate and not the net value.
Salah does a last a will and testament for himself. He is a homeowner and has a small brokerage account and bank account.
After he passes away, his successors are unable to access and to distribute inheritance until one year later. Salah’s heirs could have avoided 10s of thousands of dollars in fees by doing a living trust.
6) An Islamic Will cannot change critical state laws
A last will and testament that is going to be subject to probate court. This means it is going to be subject to binding provisions of the state probate code. A judge may ignore your wishes, not because of Islamophobia or bias. Rather, because ignoring your wishes is what the law sometimes requires. Your heirs may lose their rights in Islam from the wrong kind of planning. It is, of course, best to have an estate administration done outside of the probate court context if at all possible.
Idrees does an Islamic Will naming both of his sons as beneficiaries, Yousuf and Khalid. Idrees dies on a Friday. Coincidentally, his son Khalid dies on Saturday. Khalid’s beneficiaries would not receive any inheritance despite the right to receive it under the Islamic Rules. Presumption of death rules under state law would prevent this.
As a general matter, it is simply not advisable to plan an estate with a last will and testament as its foundation, particularly for people who are trying to plan based on the Islamic rules of inheritance and would like to save their estate and beneficiaries time and money.
A will-based plan may be fine for some limited groups of people. This is particularly true for those who cannot afford a lawyer. We make a will form available for free at the link below. You should download our Islamic Inheritance Resource Guide It provides free access to information and forms you will find useful in protecting your family.