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Parents get Islamic Inheritance too

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Can we do an Islamic inheritance plan that excludes parents? No.  Giving inheritance to parents, the Quran mandates 1/6 for the mother and 1/6 for the father, makes some people uncomfortable.

Parents, especially as they age, evidently become less and less deserving of inheritance in the eyes of their children, who eventually end up with children of their own. Parents need less because they often have more and will likely live less, or that is the assumption. Life insurance actuarial tables, as well as common knowledge and experience also presume older people will die before younger people.

However, inheritance is not about who is older and who is younger, who has more money or who has less money. The Quran (4:11) defines. As between your parents and your children, you have no clue, no inkling on an idea which one is more deserving. Inheritance will be distributed not now, but during a time and place where you will not be present. You do not know who your survivors will be and what their condition will be like.

The Islamic Rules of Inheritance is part of a system of justice. Justice must be equitable and uniform. Anything that is based on your feelings or your perception of reality will necessarily be inequitable and unjust.

By default in the United States, we often ignore them. Inheritance goes downstream, not upstream. But in Islam, it follows what is just and equitable.

Under the Islamic rules of inheritance, grandparents also get to inherit if certain parents are not around. So, for example, if a father has died, but a paternal grandfather lives, the paternal grandfather gets the share of the inheritance.

One thing that you need to be able to let go of is the notion that you should be able to determine what shares go to whom. That is vanity. Of course, the parent or grandparent can decline inheritance. Inheritance is their right, they can always turn it down and give their share to their grandchildren. Don’t expect that they will do it though.

Get our guide on mistakes Muslims makes in their Islamic Estate Planning by clicking here.

Difference between the Islamic System of inheritance and the “American System”

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I often get the question: What is the difference between the Islamic System of Inheritance and the “American System” of inheritance. So here is a quick summary for you that will explain exactly that.

Ownership of your wealth

As I describe in my guide on Islamic Inheritance, fundamental to the US system of law is the concept of “free alienation of property.” this means that your wealth is your own. You can do with it as you please. Granted, that is not exactly a “system” as it is a free-for-all. You can do whatever you want.  The Islamic System has more stringent rules.

Muslims really cannot do whatever they want. Because it is a faith tradition, there are limitations on your conduct. So for Muslims, there are dietary restrictions, how you can spend your money, how much you need to give charity and, of course, inheritance.

Distribution System

Unfortunately, among Muslims, there is sometimes a little bit of ethnocentrism, maybe it is an inferiority complex when it comes to the Islamic System of Inheritance. People sometimes believe that the system that exists presently within the United States is somehow superior to the system of inheritance in Islam. There is no possible way that this can be true. This is because Islam has a uniform system of succession while no such thing exists in the United States.

Some see it as a good thing that US States do not have a uniform system and you can do whatever it is that you want. Indeed, from our perspective, as a minority religion, it is helpful to have a system where you can do whatever you want. That way, we can follow our values. Even so, the lack of a system can be damaging for society because it allows for things like vanity, manipulation and a wide range of potential family conflicts.

Having a uniform system, like the Islamic System helps prevent conflicts.

Rights

There is a world of difference between having a right to inheritance and having no right to inheritance Islam; there is such a right. In American popular culture, there is one plot device that has been employed a few times before: a testator (somebody who is writing a last will or living trust) provides instructions that unless the movie’s (or novel’s) hero gets married by a certain age, he will get cut out. There are some real-world examples of this type of planning. Famously, Leona Helmsley would cut out relatives who failed to visit her mausoleum and sign her guestbook. He trustee monitored this guestbook.

Muslims don’t get to do things like that. Inheritance is not a dead person’s carrot she gets to posthumously dangle, or stick with which to beat the living. It is a right ordained in the Quran.

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Among your wives and your children are enemies to you

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Wives and Children are EnemiesI want to address Muslim Family Conflicts that happen after marriage.  This is probably the biggest hazard people need to worry about when they do their Islamic Estate Planning.

Coming back from the Texas Dawa Convention, where I had the privilege of addressing the main session for 90 minutes on Islamic Inheritance, I mentioned the best Estate Planning advice I can give does not have anything to do with Islamic Inheritance, getting a lawyer or even directly related to Estate Planning at all.  It is simple:  Mary wisely.

Conflict is inevitable in any society or when any group of people gets together.  They are unavoidable in marriage, in nuclear and extended families and organizations. What distinguishes a person’s character and the character of the community is not that conflicts happen, but rather how you deal with the conflict.

Conflict People

Some people have what is known as a “high conflict personality,” which may be unpleasant but is not the worst thing in the world if the high conflict person has otherwise good character.  I don’t know that too many enduring Muslim family conflicts are only the result of this.  It does provide for some tension and embarrassment for some family members though.   Very high conflict people can often maintain stable marriages and consistent relationships with children.  Muslim family conflicts can be mended. Muslim families need not disintegrate over them.  You almost never find a family where nobody disagrees about anything.  If that is your family, you are probably in a toxic situation.  More than likely though, no such family exists.

You cannot control who your parents or your children are.  However, from my observations, the bulk of Muslim family disputes that end up in Probate Court tend to happen because of marriage.   There are two places where this happens:

1)    A divorced or widowed parent gets remarried.

2)    A child grows up and gets married.

 

Of course, in the abstract (and not in in the abstract for most) both are good things and necessary for society.  However, that does not mean they don’t cause problems.   We know this from the Quran as well:

O you who have believed, indeed, among your wives and your children are enemies to you, so beware of them. But if you pardon and overlook and forgive – then indeed, Allah is Forgiving and Merciful.
Your wealth and your children are but a trial, and Allah has with Him a great reward.

Take the following situations.

Scenario 1:

Habib is a widower with 4 children, two daughters, and two sons, all over the age of 25.  He decides to marry Farhana, who has three children of her own, all under the age of 9.  Habib’s children start to notice Habib is lavishing attention on Farhana’s children while seeming to ignore his children and grandchildren.  There are family functions they hear about that neither Farhana, who apparently controls Habib’s social calendar, or Habib invited them to.

Within a year or two Habib’s children appear to notice they don’t hear from their father at all, and when they call, it is usually Farhana who answers and says Habib is not available to speak.  If they want to invite Habib, he is often not available and if he does come, he starts to be filtered through his new wife. Then he stops coming completely.  Eventually, most of Habib’s children, owing to the discomfort they have in dealing with Habib’s new family, give up.  They stop calling or even trying to visit or extend an invitation.  They no longer see any point.  This Muslim family has disintegrated.

Certain family relationships are bound to change over time.  However, there is also the feeling many people have that a new wife is alienating one family to favor the new family.  If this is not bad enough, often this results in large gifts and a changed estate plan that benefits the new wife and her family.

Scenario 2:

Salah marries Sultana, both are 22.  They live in Salah’s father’s house for the first few years of marriage.  The father, Haroon a 65 years old widower with Salah as his only son.  Haroon gets the idea to give part of his home to Salah, so that it is his home as well.  Salah, because he has a job, is paying a lot of the expenses for the household.

After a conflict between Sultana and Haroon 6 years later, Salah decides that it would be best if his father Haroon no longer lives in the house.  Haroon is now in a nursing home and his family rarely visit him.

Can you plan to prevent these situations from happening?  Yes, to a degree this is possible.  However, what is happening here is not just a failure of estate planning, but a failure of relationships.  Islam is not merely about documents and having the right ones, but rather about maintaining rights. This includes the bonds of kinship, described in several places in the Quran.  That we don’t cut off family ties is so basic to Muslims, that even when Muslims do it you cannot help but notice that people are ashamed of doing it.

Some Observations

Now I do not have any scientific evidence of how families tend to break apart.  However, I can offer some observations from what I have seen, which you can take as you will.  Most everyone thinks the best of their children.  Yes, many parents are a little bit disappointed with their children because they place their own dreams on them, but still, they think the best.  Many Muslim parents also tend to believe they have instilled some values in them that would enable them to trust their children with their wealth, their home and their lives (in the case of making healthcare decisions for example).  However, the variable that often changes this is who they marry.

This similar dynamic happens when there is a marriage later in life.  Marriage can result in isolation from the pre-existing family.  Maintaining family ties must be a priority for both spouses.  If it is not, it won’t happen.  This will lead to tragic results.

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Health care Directive: On Muslims Pulling the Plug

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What instructions should Muslims put in their Advance Healthcare Directive (sometimes known as a living will)?  Consider this example.

Abid has a car crash. A serious one. Among other medical problems, he is unconscious.  In a hospital bed.  As the days go by, doctors start to lose hope.  They do some tests and take the position that Abid is in a vegetative state.  He can breathe on his own.  His heart’s functioning so he does not need any machines to make that work.  However, doctors believe his brain is showing that he is vegetative.  They tell the family that he needs food and water, so he needs a feeding tube.  However, it may be best to just stop the food and water and let him die.  What do you do if Abid is in your care because of an advanced health care directive?

This is a serious issue many Muslim families grapple with in their own Estate Planning.  The question always comes up: “What does Islam say.”  Is there something definitive in how we do our advanced health care directives and living wills?  Well here is what is happening.  The proposal is to deny a sick, hungry person food and water.  Could that be the most compassionate thing to do?  Or could it be cruel?  What if there was no way for you to know the difference? 

Here is some more information for you:  There is no scientific test that measures of consciousness.  There is often no way of knowing if a sick person knows what is going on in the world around him or her or not.  It is possible to be in a coma for 15 years and then wake again with a brain just as sharp as it was 15 years before.  It is unclear what “vegetative state” actually means in all cases, but there is a general idea (and definitions, which may not help if a person walks out of the state and takes up piloting airplanes). 

But if you were doing your own planning, in an Advanced Healthcare Directive for example, what might you say?  Common answers are “I don’t want to be a vegetable,” or “pull the plug.”   But what if there are no machines keeping Abid alive except a feeding tube?  What if it’s the case that the term “vegetative state” is a largely meaningless concept?  

Unfortunately, I don’t have an answer for you as to the “right” decision to make in such a situation.  What I can do is suggest some guidelines:

  1. You need to have family or friends that you name who would have the ability to make health care decisions for you in the event they cannot make it themselves.  This is an enormous issue and there is a whole lot of doubt and while there are doctors involved, the science is far from precise much of the time.  
  2. Those loved ones you trust should then have someone with religious knowledge and experience in these matters. Of course, it is your loved ones who make the decision about your treatment, not the people they consult with.

It is doubtful to me if there is much utility in stating in a document, in advance, if you want to continue being treated or not continue being treatment under certain vague circumstances in an advance health care directive.  The California Advance Health Care Directive form says for example  “ I become unconscious and, to a reasonable degree of medical certainty, I will not regain consciousness.”  Since basic questions like what consciousness is exactly and how you can determine it is not known, the language does not necessarily help.   You don’t know the nature of the healthcare decision you are making just because you cannot see the future.   

The best thing you can do is give the right people respond to make decisions for you, just like you would with the rest of estate planning.

Get our free resource guide on Islamic Estate Planning, including templates and articles by clicking here.

Protecting your home from lawsuits

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While this website is about the Islamic rules of inheritance, a common goal for many families is to safeguard their assets, and their residence, if they get sued or some other financial calamity comes around.

I will focus very much on other assets here (I am sure I will write about them later), but rather, we will discuss the family home.

Creditor Friendly

California is a creditor-friendly state. What I mean by that is that California law tends to be raked to favor creditors whenever possible, including when it comes to the personal residence. So if you have some money, or, more importantly, equity in a home, and there is somebody that you owe money because of a court judgment, that person will probably be able to take that money, and that means making you leave your home.

Now if you had done a revocable living trust consistent with the Islamic rules of inheritance (and you should) one thing that does not happen is any asset protection at all, at least while you are alive. Your assets have the same level of protection from lawsuits that they would have had without doing a revocable living trust. You do it for other purposes, such as inheritance and incapacity planning.

Now obviously, you do not want to leave your home.  Now if you had some cash, a business or other assets, there are a broad range of asset protection planning opportunities that you can use. Some of them may be in California, some of them would be outside of California. However, the home has a very limited level of protection, something called the homestead exemption.

About the homestead exemption

For most California homeowners, the homestead exemption is quite small.   It ranges from $75,000 for single people to $150,000 for the elderly on a limited income. What this means is once you get evicted from your home, you get to keep a limited amount of the money that comes from the equity in that home. The rest of it goes to the creditor.

If you have accumulated significant equity in your home, like many California families, the homestead exemption offers inadequate security.

Out of State Trusts

One other option is placing the home in a trust in a jurisdiction that provides asset protection. If you have a home in California, this may or may not work. It may not work because the home is on property in California, and theoretically a judge can just transfer the property over to the creditor. Of course, if you have assets that are not in the reach of a California judge, this could be a good option, though with some caveats that are outside of the scope of this post.

Equity Stripping

Another method some people have heard about involves a process of stripping the equity from your home into an out-of-state entity. So you are creating the out-of-state entity, however, having a judge transfer the property over to a creditor would not do much, since there is no equity in it.   The problem with this tactic is that it typically involves getting a commercial loan. Loaning the money to yourself, even through a business entity, is not likely to work.  There would be a deed of trust that evidences this loan.   The idea is that a judge cannot simply undo a deed of trust that is held by a commercial lender you don’t own or control.

The cash that came from the proceeds of the loan may be somewhere safer than California.   The person who took out this loan pays it back, with interest.   Of course, the money can be invested in something that potentially pays a better return than the interest rate. However, given that this is a post meant for Muslims, we need to discuss the elephant in the room, interest.

While many people will take out interest-based loans for their mortgages and can perhaps even point to fatwas that say it is fine for them to do this, while others will disagree, we are still dealing with interest.  Now, it is possible that someone can get a sharia-compliant loan and do this procedure, there won’t be a problem.  However, there are no scholarly opinions that say an interest based loan for an asset protection plan based on equity stripping is halal.  A major downside is you need to always be in debt.  Maybe you don’t mind, which is fine.

So, equity stripping is a real option for many people, even Muslims.  Just use a sharia-compliant lender.  It does not protect the home per say but makes it far less likely anyone would want it.

Qualified Personal Residence Trust

This is another option for protecting the home without getting a loan. It is far less complicated, though there is a (small) cost.  After a few decades, you end up paying rent to your children.

The way this works is that you get a trust that splits the interest in your property with you holding it for a period of years (you determine the number of years) and in the remainder, goes to a trust for the benefit of your children. It does not go directly to your children but stays in trust.  If you survive past the number of years that you have designated, you need to pay fair market value rent.

This method, which is primarily designed for estate tax planning, is effective because an asset that is only yours for a period of years is not especially attractive.  They would not know what to do with that. Now if your children were sued, it would not affect you or them. The beneficiary is a trust, remember. It is not your children directly.

There are hundreds of thousands of lawsuits in the United States every year. If you are a business owner, a physician or if you have any regular interactions with people where you may be subject to lawsuits, you do want to make sure that you do whatever it is that you can to protect your home for yourself and for your family.   Of course, you do all of this keeping in mind Islamic rights and ethics.