Blog

It Starts with a Post by an Academic Islamic Law Expert

When someone sent me a screenshot of a Facebook post by a noted Muslim academic and expert in Islamic Law. I was perplexed by what the author was trying to do, and felt compelled to address it. I left out his name since it is not necessary.  

According to a hadith, Islamic Inheritance is half of all useful knowledge. My goal is that Islamic Inheritance (known as the “fara’id”) and the wasiyyah should be essential information for Muslim adults.  

This noted Muslim academic highlighted an unnamed “feature” of Islamic law. Where “revealed law both created default entitlements AND endowed individuals with powers to alienate those entitlements in a way that could undermine social expectations created by the default rule.” The academic then says the “testator is using his will-making powers with this twist; equal division between grandsons and grandchildren.” This scholar marveled that “there was no concern that this would somehow challenge the authority of the Quranic law of inheritance specifying that a son receives twice the share of a daughter.”  

It is hard to tell if this academic was blowing smoke or if it demonstrated confusion about what the wasiyyah was. At the very least, readers could be forgiven for reading his prose and becoming more ignorant of Islamic Inheritance and the wasiyyah. So, let’s break this down. 

If another person can alienate (sell, give away, destroy) something you think is an entitlement, it is not an entitlement. 

  Say Abdullah says to his only son and heir Bilal, “son, I have a million dollars. According to the Quran, you get all of it when I die: “A year later, Abdullah spends a million dollars on a mahar and the gift of a new home for his lovely young bride Bilquis, who ends up divorcing him six months later, but keeps the gifts. When a distraught Abdullah dies soon after, Bilal gets nothing from his now ex-millionaire father.  

Was Bilal ever entitled to a million dollars?  

Of course not. A lovestruck Abdullah had the right to give it all away during his lifetime, never mind if doing so was a good idea. Abdullah alienated his property by gifting it to Bilquis; he did not alienate Bilal’s entitlement. Bilal’s only entitlement is an inheritance from Abdullah if he survives his father. Inheritance means the wealth Abdullah cannot take with him, less his debts and the wasiyyah. 

Debt and Wasiyyah

According to the Quran, specifically 4:12, debt and the wasiyyah are deducted from inheritance. 

So, say, Abdullah never got to meet Bilquis and kept his million dollars until he died. He decides to do an Islamic Estate Plan to follow the mandatory Islamic Rules of Inheritance. Abdullah includes a wasiyyah, giving 20% of his wealth to orphan programs in his native Bangladesh. As I discussed elsewhere, his wasiyyah, should he wish to do one, is limited to ⅓ of his estate.    

Some of Abdullah’s wealth is structured, so the government taxes it after his death. Those taxes are $20,000 (a debt). Abdullah’s burial costs are $10,000.

When Abdullah dies with $1,000,000, his son and only heir, Bilal, receives $770,000.00. Bilal was never entitled to more than that. If Abdullah had a larger wasiyyah, more debt, or spent the money during his lifetime marrying women, Bilal may be entitled to less or nothing. 

Why is there no concern about challenging the Quran?

The academic here goes on to say there was a “twist”- in that the testator gave a wasiyyah to his grandchildren equally among boys and girls. This “twist” goes to “alienate those entitlements” (which, again, is not an actual thing) “in a way that could undermine social expectations created by the default rule.”

The academic explains, “there was no concern this somehow challenged the Quranic law of inheritance specifying that a son receives twice the share of the daughter.”  

Why would a wasiyyah to grandchildren “challenge” the Quran on inheritance to sons and daughters? This proclamation seems incoherent but has confused some. Children have a right to inheritance in Islam. Grandchildren generally do not (obviously, there are situations where they might). Children and grandchildren are different family relationships. Muslims who want to give part of their estate to their grandchildren do it through the wasiyyah or lifetime gifts.  

In our example, Abdullah can give up to ⅓  of his estate as a wasiyyah. So long as he is not violating any rules of the wasiyyah, it is his to bequest as he likes. Say, Abdullah had another son, Hashim, who died five years ago. Six children survived Hashim. Abdullah decided that instead of leaving his wasiyyah to orphan programs in Bangladesh, he would leave 20% of his estate equally to his male and female grandchildren from Hashim, but not his six grandchildren from Bilal, who still have both parents.

Of course, Abdullah can do this. 

Social Expectations. Where?  

Wasiyyah does not come with “social expectations” created by unrelated commands in the Quran.   This claim seems to have no function other than to confuse people. 

The wasiyyah is a simple concept. Muslims have broad but not unlimited latitude in what they can do. The Islamic Rules of Inheritance do not govern this except that the rightful heir cannot be beneficiaries.

To discuss completing an Islamic Estate Plan, you can set up a 15-minute mini-consultation with no obligation by clicking on this link.  

Why FBAR Matters

Hypothetical: Saqib is a physician in the United States. At age 50, he decides to move back home to his native Pakistan, where he maintains financial accounts of $2,000,000.

At 61, Saqib decides to move back to the United States.

Because Saqib did not report his overseas bank accounts, the government can fine him for half of his money in Pakistan.

It’s common for Muslim families in the United States to have ties overseas and move back and forth. Many also maintain bank accounts overseas to collect rents or profits from business or real estate holdings, slowly disburse charity or zakat once in a while, or just as a place to hold inheritance or gifts.

FBAR Penalties can be steep

If you have financial interests overseas, you need to know about FBAR, or “foreign bank account reporting.” Under US Law (the Bank Secrecy Act), Americans must report their foreign bank accounts. The IRS gets to enforce this with an unforgiving penalty regime. There are two penalties, “willful” and “non-willful.” For non-willful, there is a maximum fine of $10,000. For “willful,” it’s a maximum fine of either $100,000 or half of all the money, whatever is more.

 

It does not matter if Saqib brought the money to Pakistan with him from the United States, that he inherited it from Pakistan, or if it’s not even his money, only his signing authority. It also does not matter that the account was in an account that earned no interest or income. Not reporting can cause some severe problems.

What “Willful” Means

In law, words often don’t mean what your common sense tells you. If Saqib did not know about the existence of FBAR (because he is an ordinary person), the government might consider his reporting “willful.” The definition of “willful” is evolving and can include people who have no idea they need to report such things. Saqib can be “reckless” about how he conducted his affairs.

Late Reporting

If Saqib has failed to report his bank account for ten years, should he be quiet about it? Should he fess up to the government and plead for mercy? Someone like Saqib should get some professional help. According to the IRS website, they won’t impose a penalty if Saqib is current on his taxes, and the IRS did not previously contact him about his non-compliance.

After Death Reporting

If Saqib dies, he may leave his heirs with a mess and increased exposure to penalties. I have previously written about international assets and how they are often inherently problematic. American heirs of foreign property are often victims of inheritance theft. Extreme FBAR penalty liability only adds to this. For Saqib’s beneficiaries, the penalty can be as much as 35% of the inheritance in some cases.

Affairs in Order

Making sure you have your affairs in order includes Islamic Estate Planning, but you should also consider organizing your finances so that surprises like hefty avoidable fines don’t happen. To discuss planning with Islamic Estate Planning Attorney Ahmed Shaikh, you should schedule a 15-minute mini-consultation over zoom.

Note: The following facts are fictional. Any resemblance to actual people is coincidental.

Sahar is a 33-year-old mother with two young children, a boy, Hamza (5), and a daughter Layla (3). She comes from a Muslim family and is blessed with two aging (aren’t we all) parents and three siblings, 45-year-old brother Ibrahim, 38-year-old sister Salma and 28-year-old sister Maryam. Maryam, an Attorney, is not married just yet. Older sister Salma is a homemaker, her husband owns a successful packaging company, and her eldest brother Ibrahim is a married surgeon with a wife and five children. All her parents and siblings live within a 15-mile radius, and her older sister lives just a mile away.  

All her siblings share her values, and she has a great relationship with them, their spouses, and their children. There are moments of awkwardness like any family, but it’s pretty good.  

Sahar wants to name her brother and sisters as guardians for her minor children in her last will, and her husband Tariq (a rare only child who immigrated from Palestine) wants to do the same. However, Sahar would like to ask their permission first.   

How should Sahar handle this? 

Answer: Sahar should NOT ask for permission. Sahar should name her siblings in the order she and her husband feel are most capable of acting as a Guardian for minor children when she and her husband do their Islamic Estate Plan. She then tells those siblings they need to step up if anything happens to her and her husband. It is their responsibility to take care of their children. Of course, all those nominated guardians with children similarly need to have a plan in case they pass away first.  

Sahar’s siblings already have a hand in raising Hamza and Layla. Siblings are responsible for stepping up if the time ever comes and their nephews and nieces become orphans. They must take care of their kin. If they can do the job, it’s not a choice; it’s an obligation.

Predicting the Future

Does that mean Sahar’s siblings will act as guardians should the time come? Of course not. Sahart does not know the future. Even if Sahar went to the trouble of asking her siblings to act as guardians for her children, and they said yes, and also, gee, that’s a silly question, that “permission” is meaningless when everyone concerned is alive in good health.  

Any planning Sahar does is for some indeterminate time in the future does not know. Sahar does not know which of her siblings will survive, and if they do, will they be in a place where they can competently take the duties of a guardian? 

Sahar should have a close enough relationship with her siblings that she would know if they are willing to and capable of taking care of her children if it came to that without asking. That knowledge does not extend to the future. Sahar will need to update her estate planning as things change. In two years, the younger sister Maryam marries a man Sahar has values incompatible with how she wants her children raised; she would need to remove Maryam as a guardian.  

Take Action

For more, I have a Guide to Guardianship, and a FAQ.  

If someone forwarded this email to you and wants to learn more about Islamic Estate Planning, you can sign up for our newsletter here.

To schedule a 15-minute mini-consultation, you can click here. 

 

Federal law enforcement recently arrested people accused of exploiting mostly elderly customers by selling fake fine wines and whiskey as an investment, where salespeople with British accents would start talking about 40% returns and fancy storage in France.  

Of course, we don’t expect Muslims to buy fake wine as an investment, do we?  How about lottery or sweepstakes scams bilking the elderly of over $100 million a year?  What about more run-of-the-mill real estate scams?    

I have seen Muslims fall for some pretty outlandish things, but there are conventional forms of fraud, or if not fraud, some pretty hard selling in unsuitable investments, which may or may not be elder abuse. Their bank accounts are emptier whatever they are. For the most part, the elderly repeatedly seem to be victims of the same kinds of things. My goal here is to highlight some everyday things to watch out for and help develop a plan for both the elderly as well as for adult children to spot this stuff and avoid the harm that comes from it.  

For various reasons, the nature of the marketing we get changes as we get older. The kinds of mailers and online ads people over 65 get are different from what people in their 20s get. I am most concerned about marketing that results in significant financial disruptions.  

Not just marketing but personal, business, and even family relationships pose risks.   

Seminars

The great thing about reaching age 65 is that many companies want to give you free food, often in fancy restaurants. You will start getting mailers and calls from people who want to feed you. What’s the harm? 

In the book “Influence,” author, psychology, and marketing expert Robert Cialdini delves into various drivers that allow a person to acquire a remarkable level of influence over others using relatively simple tactics. One of the tactics is reciprocity. It’s basic. People don’t want to be indebted to others. There are actual studies about how feeding people makes them primed to open their wallets. Doing very little for someone can influence that person to be responsive to giving up much more in exchange.  

Dinner seminars are powerful marketing tools because they can employ multiple effective persuasion techniques. For example, a marketer may get a crowd of people to agree to some obvious, basic statements. You think inflation is terrible, right? Do you agree that 1% is a low rate of return? You agree with 20 other things; you just walked down a garden path.  

Another critical aspect of seminars is that the person on the podium comes with authority. The presenter may have a bunch of initials behind his name you have not heard of before or a bunch of professional titles. They are professional salespeople; however, while they may not have any special knowledge of the underlying investment, their expertise is to sell. Their job is to close the sale RIGHT NOW.  

It would help if you had no reasonable time for contemplation or discussion with family.  

Emotional Drivers

Everyone has pushable buttons. It’s often not hard to know what they are. It’s easy for marketers to figure out what riles up a young mother of a toddler or what kinds of things a ten-year-old boy likes. Marketers take advantage of this. If you know about the type of thing that happens every day on Fox News, you understand marketers are all about the emotional manipulation of the elderly.  

Messages could include:

“If you don’t do this NOW, you will lose your life savings.”

“The government is giving your benefits to someone else.” 

“You have a 50% chance of being in a nursing home.” 

A major goal is to make people think as emotionally as possible.  We are human beings and not robots.  Of course we all use emotions when making decisions.  This is normally good.  Is giving a grandchild a balloon at a carnival a logical decision?   Both “logic” and “emotion” to lead to a wrong decision; it’s just that it’s easier to play on emotions, and it’s something that makes people act quickly. Good decisions are best made with wisdom, whatever that is.  

It is almost impossible for people of all ages to separate financial decisions from emotions.  

There is rarely a hurry to make major financial decisions. There may be other buyers of the same property in real estate, but deciding to become a real estate investor and the strategy deployed should take time.  

“Friends”

Adulthood can, for many people, become increasingly lonely. But it’s great when we make new friends. Some people can attract the wrong kinds of friends, who may be more interested in getting access to “business partners” or “investors”- or sometimes they need “loans.”  

Sometimes, the elderly may casually meet a young woman at a restaurant; the next moment, he finds himself writing a big check to invest in a rice paddy in the Philippines (I have seen this).  

Friendships that get into an adult’s financial situation can often escalate gradually. There is no shortage of con artists operating within the Muslim community. They often prey on isolated Muslims because of family conflicts or distance from other family members.  

Marriage

Marriage later in life is undoubtedly a gift and blessing for many. However, it is also a tactic used by predators. I often tell the story of a case I had where a widower married a woman without knowing she was a convicted felon. During their 20-year marriage, she and her family members (virtually all criminals) stole millions of dollars from the family, including from the trust of the widower’s late wife, which was supposed to be for her children. They isolated the once highly successful man from his many children and grandchildren. He lived out the rest of his life in squalor.  

In many states, like California, getting married secretly is possible. I know people who have endeavored to keep their marriage under wraps out of fear of alarming their adult children.  

Relationships, both friendship and marriage, and all that comes with them are wonderful. However, they are also how families get ripped off.

Other Family 

Another thing to be concerned about for some families is, sadly, other family members. Families are more complicated than the tax code or any laws humans have devised.  

Some children exploit parents using many of the same tactics con artists do, but their knowledge of their parents (or parent-in-law) can make that exploitation much more effective. One tactic is isolating an elder from family members, magnifying real or perceived slights, or playing the family politics game better than others. Some children have managed to extract enough wealth from parents that parents become dependent and impoverished.  

How to guard against exploitation and abuse

One common thread in financial abuse and exploitation is isolation. The more isolated an elder is, the more vulnerable they will be. Some people actively work to divide family members and pit them against each other. Sometimes, the elder will drive his children away through his conduct.  

The Islamic injunction against breaking family ties comes up over and over again. For example:

And those who violate Allah’s covenant after it has been affirmed, break whatever ˹ties˺ Allah has ordered to be maintained, and spread corruption in the land—it is they who will be condemned and will have the worst abode (Quran 13:25) 

I understand family ties are sometimes tough to maintain. In some cases, where there is active abuse, it may be impossible to be close. However, children, all children have a responsibility to their parents. Nieces and nephews, grandchildren, and other family members must constantly check in on their elders and friends to know who they are. This practice is helpful for reasons beyond guarding against elder abuse. 

A Brain Trust

In addition, everyone, even younger people, but really everyone, should have a “brain trust.” We need to make our significant decisions through a shura. Nobody should ever marry without investigating the person they want to marry and getting good counsel from trusted people about the decision. Such advice is obvious, but it’s just as important for a 19-year-old getting married as it is for a 79-year-old. It’s much harder for 79-year-olds to get advice on such things.   

Due diligence is essential for major financial decisions or business relationships. A business owner used to hiring construction contractors and doing a spreadsheet analysis for every deal will still check out new contractors and get a CPA, various consultants, and other trusted advisors. Anyone who wants to hire a financial advisor or comes across a great investment idea where a guy wants $500,000 wired to his account should have a similar level of skepticism and do their due diligence.  

Anyone that wants you to make decisions based on emotion alone won’t want their mark to do that due diligence or talk to loved ones.  

Being in the presence of trusted people with no financial incentives in the relationship protects people them losing what they have.   

A Disability Panel

When Muslims do their Islamic Estate Planning, I often recommend a “disability panel”- a group of trusted people who can decide if the trust’s Grantor (the person who created the trust) has financial incapacity. When there is financial incapacity, a successor Trustee, selected by the Grantor, takes control of the finances.  

A panel in a living trust is a helpful tool when incapacity is an issue. However, that question has not come up in many cases of financial abuse and exploitation. Actively maintaining and building family ties is the best defense,not just for the elderly but for everyone.  

Of course, when there are actual elder abuse predators, it’s also important to consider that there are are some important criminal and civil laws in place, as well as Elder Protective Services agencies and law enforcement.  If you or a loved one may be a victim of elder abuse, consult with an Attorney to evaluate your best path forward.

To discuss the process of getting an Islamic Estate Plan, schedule a 15-minute mini-consultation with Islamic Estate Planning Attorney Ahmed Shaikh here.