Trust Protectors have been vital to Islamic Estate Planning in the United States.
Ibrahim, a widower, as three sons and a father. He does an Islamic Estate Plan where the distribution, per the Islamic Rules of Inheritance are as follows:
Sons: 5/8 each
Ibrahim’s father passes away on January 2. Ibrahim is busy in the days after his father passes away. He does not have time to immediately update his estate plan.
Ibrahim Dies on January 10. The calculation of shares for Ibrahim’s estate plan is now wrong.
There are a few options here. The first, is that Ibrahim’s father’s heirs get the 1/6 (which may be Ibrahim’s brothers and sisters, not his heirs in Islam. The second, is that the shares of inheritance be recalculated to reflect the actual division of inheritance in Islam, which is that each son gets 1/3.
In the United States for non-Muslims, there are a few different ways known to estate planning lawyers that wealth is transferred through the generations. Of course, there is the specific instructions, where the testator (person making the will or trust) wants to favor some heirs and charities or exclude whatever they wish. But then, there is the default, what happens when the people who are now living are no longer alive when you pass away?
The two most popular systems are “per stirpes,” and “by right of representation.” In estate planning documents, these are frequently defined. State laws mostly use per stirpes (literally off the branch). When you know the family tree, this is usually easy to figure out.
State law does not define what the Islamic Rules of Inheritance is. Furthermore, even when it does, a judge has no ability to interpret Sharia. It is not their job. So, while a judge can easily tell you how things are supposed to fall per stirpes, the same judge won’t declare what Islamic Inheritance rules are, even if it may be obvious to someone with a nodding familiarity with the Islamic Inheritance. Islam is a religion and courts don’t want to interpret religious rules (though they sometimes do in the international law context). Moreover, the multiplicity of ways Islamic law can be interpreted may make judges shy away from deciding what the right answer it.
Recalculating Islamic Shares
The solution for an Islamic Estate Planning Attorney in recalculating shares of inheritance after death (if the shares as stated in the Islamic Living Trust is now outdated) falls on two major pillars; first, we define what Islamic Inheritance is, and secondly, we have a process for recalculation that does not involve a judge.
One of the powers of the Trust Protector is to recalculate shares per the Islamic Rules of Inheritance, essentially taking the role of the Judge. Trust protectors have powers, but those are limited.
The Trust Protector is an “office” not immediately well understood by my clients. I address Trust Protectors and their uses in Estate Planning for the Muslim Client (ABA Publishing, 2019).
How a Trust Protector Fits in the Trust
A living trust is a contract between three kinds of people. The first is the Grantor (also known as a Settlor or a Trust-maker), who creates the Trust, then gives trust property to the care of a Trustee (the second party), for the benefit of a third party, the beneficiary. The Trust Protector is none of these people. Indeed, it is common for trusts to be created without a Trust Protector.
The main problem Trust Protectors exist to solve is when the trust is irrevocable:
- How do you make changes to the trust if necessary? Say an administrative provision in the trust looked brilliant in 2022 but looks antiquated and cumbersome in 2032. A Trust protector can fix it.
- How do you fire a Trustee? Say it is an irrevocable trust and the Trustee is overcharging and providing poor service to the beneficiaries. What do you do? A trust protector can help.
- How do you resolve disputes? Well, there are many ways to resolve disputes. Some are more painful and expensive than others. A Trust Protector may have extensive powers that can resolve disputes between trustees and beneficiaries.
The People Who Are Trust Protectors
Those doing their Islamic Estate Planning have options about how to structure trust protector provisions. They can decide to name someone who is not a close family member or a Trustee. They can also appoint someone who will appoint the Trust Protector. This often happens because when a family is planning, they are already naming so many people anyway. The last option is that they can have a Judge appoint a trust protector, nominated by family members.
Islamic Estate Plans Should Have Trust Protectors
Any Islamic Estate plan is incomplete without a way to recalculate shares if you are predeceased by your heir and the planner deciding on at least a process to get someone to do the recalculating. In Islam, parents get the right to inheritance, and parents frequently pass away before their children. It is not unreasonable to expect that an estate plan you have now, will be different with different circumstances.
When you do your Islamic Estate Planning, you are planning for a future world of which you know practically nothing. Who is dead or alive? Who has a substance abuse problem? What will Congress decide the rules will be for minimum required distributions for retirement plans? None of us knows. While no estate plan is future proof, it does make sense to take some commonsense measures to account for the possibility that you won’t immediately call your lawyer after things change in your life.
Click here to schedule a 15-minute mini-consultation to learn about the process for Islamic Estate Planning or call Ahmed Shaikh at (866) 403-5294.