Just a disclaimer, this post may not be useful to people who do not live in community property states like California, Texas, and a few others. Other states follow separate property or “community property”- many are former British Empire colonies and Louisiana, which follows a version of the Napoleonic code.
I hear this from Muslim husbands somewhat regularly:
- In Islamic Inheritance, the wife gets ⅛ (well, maybe ¼, but ⅛ if there are children).
- In community property, The wife gets ½.
Clients have often told me this disparity is a contradiction. Islamic Inheritance, relative to other heirs, is both a minimum and a maximum. You cannot give more than what has been ordained by Allah, right?
Community Property is NOT inheritance.
Ibrahim and Adam are partners in a detergent-making business, and both own 50% of the company. They are both men, and to be clear, they are not married to each other or related in any way. Ibrahim is married to Hafsa (who is female), and Adam is married to Salma (who also happens to be female).
Ibrahim dies. Adam gets 50% of the business. How? Adam did not inherit 50% of the company, he had already owned 50% of the business, and he owned it regardless of if Ibrahim was dead or alive.
Wait, I thought we were talking about community property?
So far, none of this is community property. Also, none of it is inheritance. I provided the above example to describe how community property is similar to other property arraignments you may be familiar with. Nobody has to do community property, but it’s also not as alien as some may think.
Ibrahim and Hafsa decide to divide up their home and interest in their business, bank account, and brokerage account as community property. In one respect, this is no different from Ibrahim’s relationship with Adam. She gets 50% regardless of Adam being dead or alive, so 50% is NOT inheritance. People claiming it somehow contradicts the Islamic Rules of Inheritance are making apples to oranges comparisons.
Marriage is a contractual family relationship.
Say Adam agrees with his daughter Kulsum to give her $1,000,000 after he dies in addition to her rightful share of the inheritance? This arrangement is not allowed in Islam. He can give Kulsum a gift of $1,000,000 now if he wants.
It’s a bit different when it comes to marriage. Adam can agree with Salma that he will pay $1,000,000 to Salma upon death or divorce as part of a negotiated Mahar. Adam won’t negotiate anything like a Mahar with his daughter Kulsum. If Adam dies, he will still be Kulsum’s father; she is not getting another one. Salma can potentially go on and marry and divorce or be widowed again, negotiating more Mahar arrangements if she wants. Instead of payment at death, Adam can also give Salma half of all his assets. Maybe it’s a bad idea for him to do that. If he has children, it will probably cause a few problems. However, he can do it if he wants.
However, Adam can also get into a business arrangement with his daughter and co-own assets. Indeed, it is common for parents and children to co-own assets, just like it’s common for married couples to co-own assets. Of course, people co-own assets with unrelated people (the stock market is full of that).
Islamic Inheritance with Community Property
As you might guess, Islamic Inheritance may work differently with community property assets than if you are dealing with a deceased father who had a business partner. Business assets, say in a corporation, are easily divisible. In community property, each spouse owns 50% of everything. So, it’s not just 50% of each bank account (which one can divide easily), but of real estate and personal assets, like the bed the surviving spouse is sleeping on.
Every Islamic Estate Plan will typically need to draft an agreement that includes non pro-rata division of community property. That means other heirs like Kulsum will get their rightful share of the whole, but not necessarily the rightful share of each asset. In the case of Adam, it means his wife Salma can keep her bed, jewelry, and maybe even the house (the house is something I write about separately), but Kulsum will get her inheritance from what constitutes her father’s estate.
Is Community Property Mandatory?
No. Married couples do not need to own their assets as community property. In much of the United States, there is this expectation that marriages are not just a family and social partnership but a financial one. Often, spouses do not distinguish between the husband’s assets and the wife’s, especially if they have been married for several years. While that is fine, it’s not for everyone. Indeed, in some situations, this kind of thinking can be dangerous and unfair and result in injustice.
In many situations, community property is the default way property couples and the courts treat property. So married couples who do not get a prenuptial or postnuptial agreement, anything earned through the skill, labor, and effort of either spouse belongs equally to them.
What is not community property?
In general, property NOT earned through skill, labor, and effort is separate property. By that, I mean inheritance and gifts to an individual will not be community property. This “skill, labor, and effort” terminology is not universal, and there will be some nuance to it. For example, lottery winnings (sidenote: don’t play the lottery) are typically community property even though the winner got rich through no skill, labor, or effort beyond scratching a piece of paper or writing down some random numbers.
Blended Families and Later in Life Marriages
Not everyone who gets married starts young with the hope of building a life together. Many people have pre-built lives, estates, and sprawling families with children, sons, daughters-in-law, and grandchildren. A new spouse will enter a world of family politics and implicit and explicit conflicts over wealth. Don’t ever take this lightly.
Of course, what the spouses want to do with their wealth matters. But there are the opinions of others that matter as well because the goal for all concerned should be long-term peace and harmony in the family. A spouse, particularly a wife, is interested in some financial security. That will create conflicts with other family members and color how they perceive the relationship. Unless the couples handles this well, the family can be an unpleasant place for some time.
How Islamic Estate Planning Helps
Islamic Estate planning is far more than the Islamic Rules of Inheritance. It’s about creating a rule book with many different kinds of legal documents that aid the cause of peace and harmony in the family over the long term. Relationships are more about people than documents, but good planning can be valuable.