Blog

A Muslim Guide to Debt and Estates

April 4, 2018 By Ahmed Shaikh

Debt is a scary word. It is a natural part of life. In our tradition, debt is not necessarily looked upon as a business. Rather, as a benefit or an act of charity. Indeed, the interest-based system of debt is explicitly prohibited in Islam. Muslims regularly engage in this system of debt for things as varied as education, healthcare, businesses and of course mortgages. The subject of this post is not about those types of debts. Whatever “halalness” or “haramness” of these, it is useful to say that these types of debts often have the benefit of being clear as to their terms and their effect when it comes to the estate.

Debt and Inheritance in the Quran

After death, debts must be paid off before any of the beneficiaries are given anything (Quran 4:11) pursuant to the Islamic Inheritance. This is made easier by the fact that student loan contracts and mortgage agreements have specific terms that deal with what happens after death. It is something that people know how to deal with, or at the very least, can figure out.

The debt that I am most concerned with is the variety that causes problems within families Or amongst friends. Frequently, this type of debt is not documented anywhere and if it is, the documentation can be inconsistent or difficult to confirm after one of the parties has died. Occasionally, basic facts about the transaction can be disputed, including whether the debt was even a debt at all or if it was a gift. If part of our all of it was forgiven or if it was repaid.

Write Down Debt

Follow the recommendation in the Quran. Make sure you have your agreements in writing. Not all debt contracts will always fit the exact description in the Quran and this is not regarded as a requirement, but do it anyway. Some family and friends agree to “pay me whenever.” Or, “if you have the money, pay me.” A lackadaisical or not especially concerned creditor loaning to family members or friends out of a sense of goodwill may be horrified to learn that their loan caused so much grief after death. Don’t be that person.

Even with the best intent, debt can be a dangerous thing. Make sure you always write down the terms. Be sure it is witnessed and all responsibilities are clear. This is not about whether you care or not. It is about if you leave a legacy of conflict or harmony. How you conduct your business affairs can lead to either result.

Islamic Inheritance and legal fictions

March 15, 2018 By Ahmed Shaikh

When we plan based on Islamic Inheritance, how do we account for legal fictions?

A while ago there was an interesting story about a man who wants to be declared alive but has had no luck. He disappeared for years only to resurface and wants to reenter his life somewhere. There appears to be no mechanism for him to gain a new birth certificate after he has already been declared dead. A former wife, or the legal widow, opposed undoing the death because she was a financial beneficiary from that death, and could not pay the money back.

The law is full of fictions. This means we say things are a certain way because some goal of society is being met by doing so. Having fictional anything in the law as fulfilling a valuable goal or not is subject to the whims of policymakers.

“Corporations are People my Friend”

What former Presidential candidate said was kinda true, corporations and LLCs have the same rights as people in many respects. They can sue and they can be sued, though they don’t vote. Similarly, adoption serves a legal fiction, where the parental rights of one parent or a set of parents is severed in favor of one or more parents who have no blood relationship with a child. The “child” may not even be a “child” but could be an adult. California allows for more than 2 legal parents for a single child. As of now, this is impossible as a matter of fact but is certainly possible as a matter of law. If Apple Inc. can be a person; a child can certainly have three legal mothers. These are legal fictions we have become used to.

Similarly, a person who is alive can also be legally dead, as I described. An actually dead person can, of course, be legally alive, at least for a time. Estate Planning documents usually do not address the dead coming back to life. These legal fictions are rare. The closest that I have ever seen are for “personal revival trusts” meant for people who are cryogenically frozen after death who expect to wake up, eventually. I don’t do personal revival trusts. Those are just scams.

In Islamic Estate Planning, Living Trust provisions often include simultaneous death or death when it cannot be determined if one person died first or another. It may also address other legal fictions such as adoption and corporations. Keep in mind, for Islamic Inheritance, Islam will govern all of these things. You cannot presume a person is dead when they are alive, and adopted children do not have the same rights as children. You can read more about this in our guide to Islamic Inheritance.

Parents get Islamic Inheritance too

March 13, 2018 By Ahmed Shaikh

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.

To learn what the calculation should be in the Islamic Rules of Inheritance, check out our calculator:

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”

March 13, 2018 By Ahmed Shaikh

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.

Download our free resource guide on Islamic Estate Planning.

Among your wives and your children are enemies to you

January 8, 2018 By Ahmed Shaikh

Wives and Children are Enemies I 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.

To set an Islamic Estate Planning Appointment, you can just click here.