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Pay on Death (POD) or Transfer on Death (TOD) Accounts for Muslims

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When you go to the bank, there are several different ways you can open a bank account for your savings and checking. Different banks have different rules.  How you own your account  then have consequential effects on the rights of beneficiaries if you were to pass away with that account.
One mechanism for holding your account is known as “pay on death” or  “transfer on death,” accounts, known as PODs or TODs.  They will essentially mean the same thing.   You create  a contract with the bank, that when you pass away, your account gets transferred to another individual. One frequent use of this type of account would be to name a spouse or or an individual child. In one sense, it is very similar to a “beneficiary designation” takes place for life insurance and retirement accounts.
My general recommendation is that these accounts should not be used in this manner.   This is because it will frequently be a violation of the Islamic rules of inheritance. Holding your account as a pay on death  or transfer on death account  does not relinquish your responsibility of distribution consistent with the Islamic rules of inheritance.
Even if the pay on death or transfer on death account resulted in a transfer that was consistent with the Islamic rules of inheritance today, is not necessarily going to be the case that distribution is going to be correct at the time you pass away.   This is because more people may be born and some people may die between the time you set up your account and the date of your death.
 While in general, PODs and TODs are not subject to probate, because  the assets pass  to others based on a contract, a probate may occur if the individual beneficiary predeceases the account holder.
Now in some situations,  people may wish to hold accounts in this manner because they are actually holding the money for another individual. Say, the money actually belongs to the son but the father is holding up on his behalf for whatever reason. This is  actually an even worse case for use of such an account. If the son were to predecease the father, then the father dies, the son’s beneficiaries would not typically be beneficiaries.
The best way to hold an account, is for it to be in the name of a revocable living trust.  This will offer significant flexibility to distribute consistent with the Islamic Rules of Inheritance.
To see our free report,  six mistakes Muslims make when doing their living trust, please click here.

Can Islamic Estate Planning be banned in the USA?

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For now, Islamic Estate Planning is safe.  The United States is one of few countries in the world that has testamentary free alienation of property. What this means is that you can give whatever you want to whomever you want in whatever manner is that you want, for the most part (inheritance is governed by states and there are exceptions).

  • Do you want to disinherit all your children and give all of your money to the 17 cats that live in your basement? No problem.
  • Do you want to give all of your assets away to charity? Yes.
  • Would you like to have your executor withdraw all your money in 20-dollar denominations and burn it in front of a group of orphans? I don’t know. It has not been tried yet to my knowledge.

Obviously then, you can give less to one child then you give to another child. A Supreme Court Justice did exactly that in his own will (though this document is maligned in the legal profession today for other reasons). A person’s reasons for what they do with their money can be incredibly well thought out or they could be completely arbitrary and even malicious. The basic idea is that it is your money and you can do with it as you please.

In the United Kingdom there is now a question mark on the issue of whether or not a parent may be able to discriminate against their children based on sex. They have also had a tradition of free alienation like the United States. It is important to be clear though; anybody who says that the Islamic rules of inheritance discriminate based on sex is analytically sloppy. That is not exactly what is happening. Yes, daughters get less than sons (Quran 4:11). Men however do not always get more than women. They may get the same or they may get less depending on the relationship.  I have previously written about the difference between boys and girls getting Islamic Inheritance and will not belabor this.  When you are a Muslim, your inheritance goes to your children in accordance with a specific formula. This is because your property is not your own, but is entrusted to you. Allah ordains inheritance.

One thing that I suppose this uniform system of inheritance does is it distributes inheritance in ways that “most people” do not do. It breaks certain expectations and that can be scary to some. Remember though, we are talking about societies in which large numbers of people give all their wealth to cats.

This past summer, a Court in the UK decided that an estranged daughter who was excluded from inheritance by her mother should be able to receive inheritance anyway. The woman had a boyfriend she later married that her mother did not like. The daughter went on to have five children and never made peace with her mother until the day her mother died. The mother decided to give everything to charity. This is typical behavior you would normally see from estranged egotistical parents and is perfectly fine in the United States. The denial of her testamentary freedom in the UK was not because of the normal reasons to throw out a document, such as fraud, duress, menace or undue influence (which happens with some regularity in the US) but because the mother’s reasons to decline to distribute inheritance to her  daughter were not good enough, in the court’s judgment.

The family in question was not Muslim. Indeed, denying somebody inheritance based on being estranged is prohibited in Islam. This kind of decision by any court can open the door to all kinds of judicial mischief including the ability of Judges to simply second-guess the decedent’s wishes for almost any reason and in particular in the area of Islamic Inheritance. This can be a problem when judicial Islamophobia is most acute. Judges and Juries are made up of human beings with biases and prejudices, just like teachers, police, legislators and other public servants.  Many sadly labor under misconceptions about Muslim families and societies common on website comment sections and those could result in bad decisions.

Institutional Islamophobia is a real threat to these freedoms. The United Kingdom is currently in the midst of a crackdown on “non-violent” expression by Muslims. UK policy is based on a belief that violent behaviors have precursors in religious practice and intellectual inquiry. They are now working to detect future terrorists among preschoolers.

In the United States though, we have the bill of Rights and more specifically, the free exercise and establishment clauses of the First Amendment. We also know that an attempt to ban Islamic Inheritance has been tried before. But we are by no means immune to national hysteria, as anyone with a nodding familiarity with the 2016 election cycle can attest.

As many of us in the United States remember, 2010 was a mid-term election year where Islamophobia was perhaps the biggest national issue, though it was bigger in some states than others. The alleged conspiracy to impose “Sharia law” rotated with the “Ground Zero Mosque” for attention. In 2016 it is Syrian Refugees secretly being ISIS members who want to kill us all or one of any number of rotating clownish refrains.

In 2010 the State of Oklahoma enacted an initiative known as “Save our state.” The idea was to save Oklahoma from a conspiracy to subvert the constitution and establish “Sharia law.” This meant that if a Muslim wanted to distribute their estate after death according to the Sharia, even if what that meant was spelled out, a Judge would be obligated to ignore such an instruction.

One lawyer, Muneer Awad (then of CAIR, with the help of the ACLU), who had an Estate Plan consistent with Islamic rules, decided he would challenge the law by first getting an injunction (immediately stop the law from taking effect), then having it declared unconstitutional in Federal Court after a full hearing. It was not a hard case under the constitutional law of the time and today. But the political winds can change rapidly against a minority community, so it is not without some risk.

Awad was successful because the law plainly violated the ability of Muslims to exercise their right to practice their religion. Never mind Islamic Inheritance is a fard (obligation) in Islam sadly ignored by most American Muslims, though often more because of ignorance of it than fear. Never mind that Awad wanted to fulfill a faith tradition 70% of the residents of his own state voted he should have no right to practice.   Awad chose to not only practice his faith but to work to vindicate that right, and the right of others to do so.

The ability of lawyers to defend the First Amendment and the ability of Muslims to practice their own religion can be seriously degraded and perhaps removed entirely if Islamophobia continues to grow. The biggest threat was never external Islamophobia, the initiative in Oklahoma or the invective of the media or politicians. The biggest threat was always internalized Islamophobia.

The United States clearly has superior constitutional protections (right now) than the UK but this is by no means enough to overcome overwhelming hostility. Indeed the notion that the United States has historically been a beacon of religious freedom and tolerance is a myth thought to schoolchildren.  Much of it’s history; America has been a villain when it comes to religious freedom. Several religious practices, particularly among Native Americans, but also others, had been criminalized.

Countering Violent Extremism (CVE) an attempt by government to institutionalize, not merely Islamophobia, but internalized Islamophobia and to have designated “moderates” determine what is and what is not the more civilized version of Islam. The US Government has for some time been using routine religious expression as a basis for criminal investigations, intelligence gathering and even prosecutions. But CVE is not about violence at all. As Scholar Hatam Bazian has pointed out, CVE is a requirement that Muslims go through “civilizational group therapy.” The founding document of Countering Violent Extremism, “Radicalization in the West,” still used by the Obama Administration, Congress and most notably in some version or another- CVE friendly Muslim groups – though now not by the NYPD itself, finds that increased religious observance is somehow dangerous.  Fear of people reading and understanding the Quran figures prominently in the report for example.

While radicalization theory been widely regarded as nonsense, those who serve the national security state believe it in some form. If they did not, CVE would be utterly pointless.   The premise of the program would be to simply divine criminal conspiracies before the conspirators know one exists, nonsensical unless you factor institutional hatred of Muslims. A variant of radicalization theory will always be needed to keep this government sponsored group therapy session going.  It will focus more on religious practice and beliefs than on violence, since violence is addressed by the criminal justice system.

Some Muslims are willing to parrot the National Security State’s narrative of what Islam should or should not be, on matters that have nothing to do with violence but rather what version of Islam should be favored.   Other Muslims are sadly embarrassed by inheritance rules in the Quran they feel are “unfair” or “backwards” or don’t match with their “western values”, ergo they are in need of “reform.” Internalized Islamophobia is no different from external Islamophobia in that they are both borne of ignorance and fear. However nothing is more of a threat to religious freedom for Muslims than large numbers of Muslims willing to ignore or even denounce their own religious requirements due to the fear of social opprobrium from their perceived betters.

We need more people like Muneer Awad, those willing to publicly practice Islam and stand up for it. Even when 70% of the population of his state stood against him, he won. This is something we can all learn from, since no victory is permanent.

Unless we both use our religious freedom and stand up for it, do not be surprised if it is taken away.

To get our report, 6 Mistakes Muslims make in their living trusts, click here.

 

Disown your Muslim daughter for marrying a non-Muslim?

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Can a Muslim disinherit or disown someone who is not appropriately practicing Islam?

The short answer about disinheritance or disowning a Muslim child (or likely an adult child) because they did haram things is no, you cannot do that. But this is so much more interesting than that simple answer.

The Jewish Clause

Many American Muslims pay attention to the history and the trajectory of the American Jewish community. The reasons for that are quite obvious. Leaving aside the politics of the moment, it is hard to ignore the many similarities as well as so much common history.

One of the other things that you may not know about Judaism, is that the Bible actually has its own system of inheritance and many people, to this day, hope to have their estate distributed based on Jewish law. Jewish law and the Jewish traditions have made their way into mainstream American culture as well as law for at least the past century.

In the Los Angeles area, non-Jewish business owners agree to have their business disputes resolved through arbitration based on Jewish law rather than local California law. One of the earliest law review articles I remember reading was by Judge Alex Kozinski & Eugene Volokh, which described how Yiddish was replacing Latin as the “spice language” of American law. How rapid change could occur in the law and how people think was so fascinating for so many reasons. This is why I am hopeful that the fard of Islamic Inheritance will eventually catch on with American Muslims.

Islam or Disown

In my own field, and I am an Islamic Estate Planning Attorney, one of the more interesting cases concerning the Jewish community involves the so-called “Jewish clause.” This would be a provision in an estate plan that mandates a beneficiary to be married to a Jewish spouse rather than marry outside of the faith. Marriage is, of course, the way to protect a society and a religion. The Testator (the person writing the will or trust) would disown or disinherit whoever did not comply.

In case you’re wondering if it is against public policy (and in this type of situation, it is not) you can generally place all sorts of conditions on inheritance. In a place like California, there is really no right to inheritance anyway. You can disown or disinherit family under state law.

In Islam, there is a right to inheritance. This right not recognized under state law unless an individual makes it so for his or her own wealth. There is a gigantic difference between what went on with the “Jewish clause” and what happens with Muslims.  Muslim men can marry Christians and Jews) the women may not. These types of marriages should have no negative consequences with regard to inheritance for anyone. No matter who they marry, even if it actually violates Islamic rules, Muslims would still be entitled to inheritance by right. Those are separate issues.

Strings Attached

You see, it does not matter if someone is a “good” Muslim, or a “bad” Muslim, if they misbehave in public or are serving time in prison for murdering a total stranger; Muslim heirs have the right to inheritance.

Sometimes, I get clients who want to attach strings to their children’s inheritance. They want to make sure that their child marries a Muslim, they want to make sure that their child memorizes a certain amount of the Quran or other such beneficial things. I always tell them that they cannot do that. They do not need to earn an inheritance, as it is theirs by right, ordained by Allah.

The Status of being Muslim

So the issue of the Jewish clause is actually irrelevant to the Muslim community right?

Not exactly. Being Muslim or not is a consequential status for inheritance rights. For example, if an individual was once but is now is no longer a Muslim, they are subject to disinheritance. If they were never Muslim, to begin with, they do not have the right to inheritance, but they do have the potential ability to obtain a wasiyyah.   In some ways, this is a much more complex issue than merely mandating marriage with the threat to disinherit. The strange thing about the Jewish clause is that it actually mandated that an individual should marry within the Jewish faith, it did not mandate that the beneficiary actually continue to be Jewish.

For Muslims, there is a requirement that the inheritance by right goes to somebody who is a Muslim. It is not actually mandated that the Muslim be especially observant or marries within the faith tradition.  Even if a beneficiary is a disappointment, A Muslim generally has no right to subject a rightful heir to disinherit or disown them.  Of course, this is not the same as a legal right under state law, where you generally can do that.islamicinheritance.com/islamic-will-template2

Be sure to get our resource guide on Islamic Estate Planning. It’s Free.

Girls Inheritance and Boys Inheritance

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I am now initiating my new website and wanted to make sure I have a blog post ready before it goes out into the world. I have been speaking and writing about the Islamic rules of inheritance for 9 out of my 15 years in the practice of law.

Within the Muslim community, this is an area that has a vast amount of ignorance, confusion and curiosity. I would say the biggest thing it has by far is ignorance. Most Muslims do not know that there is a Fard  of Islamic inheritance that they actually need to take care of and not doing it, means that they are oppressing their family members, or the setting the stage for that.

I would invite you to join my email list, which should include some helpful audio as well as posts that are only available when you join.

Take a look at my article from 2011 at altmuslimah,  on the Islamic rules of inheritance as it applies to the difference between inheritance for boys and girls, by that I mean children. I do not mean the difference in inheritance between males and females as there are different rules, depending on the relationship. A father and mother get exactly the same inheritance most of the time.

When I wrote that article, it generated a spectacular level of animosity at the time.   The comments are all gone now, I am not exactly sure why. While many people get it, unfortunately a lot of people dislike these rules of inheritance, despite there being clear in the Quran.

Take a look at the article, let me know what you think.