Islamic Estate Planning is unfamiliar to most American Muslims. Understand that this FAQ only answers general questions. This is not a replacement for a lawyer. Contact us if you want to get in touch. For more comprehensive information, you should get our free report on mistakes people make in their living trust, and get on our email list.
Why do boys get more inheritance than girls?
The short answer is that this is what is prescribed in the Quran, 4:11. However, this does not have anything to do with who is more valued in the sight of Allah. It does not mean that women have a lower station. It does, however, follow the notion that men have responsibilities with their funds towards women. While at the same time, women have no such similar financial responsibilities towards men. So the idea here is to align rights with responsibilities.
Can I change inheritance to allow my daughter to receive more?
You cannot change the right to inheritance if you want to do Islamic Inheritance. That is ordained in the Quran. So if you are unhappy that a daughter is getting less in inheritance and you want to change it, you cannot do this without violating the rules of inheritance.
But I really, really, want my daughter to get more. Is there anything I can do?
Yes. You can give it away now. Islam does not, as a general rule, regulate gifts given during lifetime. So you can give away gifts to your daughter if you want. There is no need to give an equal gift to your son if you don’t want to.
This is NOT an end-run around inheritance rules since once you give the gift away, you have parted with it. It is no longer your money. You may live years or even decades more without having the use of these assets.
But if I do it through a living trust, that is the same as giving away a gift, right?
Not at all. A living trust, which is a revocable document, does not actually “give” anything to anyone. It is an arrangement for your property to name you as the Grantor, Trustee, and Beneficiary of your assets, and then name successor trustees and beneficiaries in the event of your death. It also names successor trustees in the event of your incapacity.
The assets inside a living trust remain your own. You don’t give them away during your lifetime. Therefore, it is not a proxy for a gift.
But are there ways to give gifts in Trust?
Yes, there are. You can give gifts in trust but they must be “irrevocable”- which here means once you have parted with the assets, it is gone forever.
Why would I give away something in a Trust as opposed to giving writing a check?
Well, Trusts have significantly more flexibility for families. A trust is a method of holding property that splits control and beneficial interests. It may be that the different “offices” of a trust (trustee, grantor, and beneficiary) occupied by the same person, which is almost always the case in a revocable living trust, but ownership rights can also be split apart. Thus, it is possible for a father to be the trustee and a daughter to be the beneficiary.
Do you have an example of a trust like this working?
Yes. Haroon has a chemical manufacturing business. He owns all the shares of this business. He would like to give a portion of his business to his daughter Sultana. Haroon gives the shares to Sultana in trust. This way, if she is sued, goes bankrupt or gets divorced the shares cannot be taken away. As Trustee, Haroon may continue to vote with them on her behalf if the Trust is drafted to do that. If he sold the shares the value of the proceeds belongs to Sultana’s Trust. The assets are not his, he is holding them for the benefit of Sultana.