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.
What is a Last Will and Testament?
The Last Will and Testament is a legal document that expresses an individual’s wishes as to what should happen to property as well as make nominations for guardians for minor children.
Is a Last Will and Testament all I need?
Typically, the answer is no. The Last Will and Testament will only cover certain types of property, known as “probate” property, which means planning will need to be more comprehensive since most property is often not “probate property.”
Is a Last Will and Testament the same thing as a Wasiyyah?
No. Those are two different things. A Last Will and Testament will cover only “probate property” while a wassiyyah is an Islamic term that allows for largely discretionary distribution of up to one-third of an estate.
Where do I include burial instructions?
You may wish to include burial instructions in either a Last Will and Testament or in a separate writing. A separate writing is preferred as it is in a separate tab that can easily be found in an estate planning binder.
Are burial instructions necessary?
It is not required for individuals who are active in their local Muslim community and come from well-established local Muslim families. Burial is quick and systematic in virtually any Muslim community. Muslim burials are often uniform, and planning is often not required. However, many individuals will have specific requests they would like to make. For example, a person may like to have siblings flown over at his own estate’s expense.
If you come from a mixed-faith background, definitely consider burial instructions. There may also be other situations where specific burial instructions are advisable.
What does a marital property agreement do?
This is an agreement between a husband and wife as to how they own property. In general, property, which includes both “realty” and “personalty” is going to be owned as “community property,” which is owned 50-50, separate property or a combination of the two. Other terms specific to the couple may also be included.
What is a living trust?
A living trust is a device used to hold property that often functions as the core of a good estate plan. It is a rulebook that addresses how property is to be handled either upon death or incapacity. There is a wide range of flexibility in how a living trust may be designed to benefit family members in specific ways.
What is the difference between a last will and testament and a living trust?
A last will and testament is limited in that it only covers probate property. This is property that can only be transferred using a dead person’s signature. Property that is in the name of the trustee of a trust can be transferred with the signature of the trustee, even if it is a successor trustee. While not all property can be owned through a living trust, and estate can be organized with it so that probate can be avoided altogether.
Why do I need a last will and testament if I have a living trust?
Estate planners include both documents with the last will and testament of being referred to as a “pour-over will”- this is to say it is a backup measure in the event there is probate property. If a trust is not properly “funded” probate property may be the result. In such a situation, the last will and testament will be useful. Another situation where it may also be useful guardianship for minor children. While both guardianship and burial instructions can be included in a last will and testament, they may also be included in a separate writing.
What is the purpose of a personal property memorandum?
A personal property memorandum will specify what pieces of personal property, such as jewelry and antiques, would go to which specific individuals. The planning is done so that Islamic rules are not violated. Planning documents will incorporate specific rules that would make a gift fail if it violates the share of inheritance applicable or the Wasiyyah, which is limited to one-third in the aggregate.
What is a certificate of trust? (Also known as a privacy affidavit)
This is a document that provides bare-bones information about the trust for use primarily by financial institutions who do not need to see the entire document. A revocable living trust and estate planning documents, in general, are private.
What are funding documents?
For many clients, various documents are created for registering an asset in the name of the living trust. A living trust is only as good as the assets that are inside it. For this reason, businesses, real property, bank and other financial accounts must be registered in the name of a living trust.
What are Beneficiary Designation Forms?
These are forms used by insurance companies and financial institutions that should be considered contracts to distribute assets in the manner designated in the form. So if you have a life insurance policy, and you do a beneficiary designation, after your death the death benefit would be distributed in the manner that you specify.
What is the deed of trust and how is it different from a grant deed or a quick claim deed?
Certain deeds convey real property. So, for example, a grant deed would be used to sell your property to another individual. A quit claim may do the same, but includes no “warranty.” A deed of trust is a documented that does not typically transfer property from one person to another but provides a security interest in the property. Mortgage companies, for example, typically use this document to record their mortgages.
Is a living will different from a living trust?
A living will is for health care instructions. A living trust is a property management device.
What is an Advance Health Care Directive?
An Advance Health Care Directive is a California state form for addressing health care instructions as well as naming individuals who would make health care decisions for you if you cannot make them yourself. You can also state your health care preferences here.
What is an HIPAA Waiver?
HIPAA refers to the Health Insurance Portability and Accountability Act of 1996. In general, your health care information is supposed to be private. You may want certain individuals to have access to your healthcare information, for example, close family members. Estate plans typically include a waiver for this purpose.