Indeed, those who unjustly consume orphans’ wealth ˹in fact˺ consume nothing but fire into their bellies. And they will be burned in a blazing Hell! – Quran 4:10
Stealing Inheritance Has a Long Tradition
This is a verse of the Quran, 4:10, that immediately precedes the verses on Islamic Inheritance. It is a recognition that people do steal from orphans. The thing is, it’s possible to get your Islamic Estate Plan right but have someone you trusted steal it after you die. It happens all the time. Often, these are not just random people, they are not merely unscrupulous orphanage administrators. Sometimes, they are uncles, the surviving parent, stepparents and others who have guardianship of an orphan. Precisely the people who are in a position of trust.
One of the weaknesses with any estate planning is that we are dealing with human beings. People can be fickle, their personalities can change, their circumstances can change, or, the trust that someone placed in them was misplaced for years and the folks who trusted either had no idea or wanted to have no idea.
This is the thing about trust; it is essential to a functioning society. We trust mothers, we trust fathers, children grandparents and others in our family. Going beyond that, people trust their school systems, their banks, their employers, their government, customers and on and on. We need to do that, that is how society works. Even so, we all know that governments often violate the trust of the governed, children let their parents down all the time, as do teachers and just about everybody else at some point or another.
How does this fit in with the trust?
The thing about doing a revocable trust, is that the distribution of the trust of the various beneficiaries happens after you pass away. You are going to pass away at some indeterminate point in the future. Sitting here right now, reading this, you have no idea what the circumstances of the world will be like when you leave it. You do not know who is rich, who is poor, who has a gambling problem, a drug problem, what religion anybody is, who they are married to, or if the people around you right now are living or dead.
You do have some advantages here though. While you are alive, and healthy, you do know what the circumstances of the people around you are like, for the most part. Sometimes your family members are keeping secrets from you.
Understanding your responsibilities in selecting a trustee or other fiduciary
Often, people with adult children will often select the eldest child as their first choice of a successor trustee, even if there may be misgivings among other family members over this choice. This is often because they do not want to offend the eldest child, given that there is a ranking system among children within families that has to do with birth order. Other times, people’s will select family members based on how successful they are, how successful their marriage appears to be, physical proximity to the parents or other considerations.
In some families, it’s not the children, but the daughter-in-law or the son-in-law that would be the most trusted and reliable.
None of these things are necessarily bad or wrong in themselves- that is how things go in families. There can be problems though.
Who has influence over the parents
Sibling rivalries often figure prominently in Estate Planning. Muslims are quite fortunate in that there is a uniform system of inheritance. Parents don’t get to pick the share of inheritance or determine who is more deserving among children. There is however, a difference between “Estate Planning”- which is how assets are organized, and include a complex array of gifting, tax planning, business planning and asset protection systems, and “inheritance”-which is what successors get from a deceased person when that deceased person cannot take things with him or her (which is every deceased person, to be clear).
In certain types of estate planning, parents may have very different relationships with different children. Those include the following:
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Business relationships
There may be controversies among family members about how much a child who is in the family business actually contributed to that business. A child who works in the business may actually consider themselves to have earned “sweat equity” and may take over the business in ways that might increase tensions among others in the family. Siblings were not involved in the business may not feel that there was any sweat equity at all and that the child in the business was little more than an entitled ne’er-do-well collecting an allowance though adulthood while pretending to be a business tycoon at their father’s company.
When it comes to family business planning, keeping the peace within the family over the long term is often a vexing goal for parents. More than that, because there are often going to be allegations of “undue influence” between the child that is in the business and children that are not in the business, it’s going to be important how much you “privilege” one child over another.
Children were not involved in the business are often going to feel like there inheritance was stolen from them. They may all live in different realities about what happened throughout the rest of their lives.
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The failure to launch
This is a scenario where one child continues to stay with the parents, never really has steady employment and perhaps never gets married. As the years go on, this child starts taking over virtually all financial responsibilities for the parents. Other siblings might see the situation differently.
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Was it a loan?
One of the more common scenarios is intrafamily loans. Parents may loan certain children far more since some children are more successful than others. Loans can be for failed startups, real estate or, just to provide some needed cash at the right time. These things may not be loans at all, but could be gifts from parents. That is also known to happen.
The problem is children may not actually know what it was. If one child was the beneficiary of largess from a parent that another child was not, often the parent will not be blamed. The sibling who was the beneficiary of this largess will often be accused of stealing, or some sort of elder abuse. Not paying back a loan by re-characterizing it as a gift when it was not a gift would be stealing.
The problem is, the vast majority of the time, loans are not documented within families. The people who gave the loan or gift, are typically not available to tell anybody what it was. Different siblings might have different stories about what the parents told them.
Of course, writing all of this down is vital, and something advised in the Quran.
Managing conflicts of interest
In a variety of situations, including the ones I mentioned above, there are conflicts of interest when it comes to children acting as trustees for their parents. Among the responsibilities of the trustee, for example, is managing a business or collecting debts. These are some of the biggest controversies in managing estates. Siblings may be caught in the middle of them. Managing conflicts of interest poorly is often indistinguishable from stealing inheritance for some people.
Personal failings
Sometimes beneficiaries can play fast and loose with ethics. They may “borrow” funds, live in a house indefinitely when they should be selling it or paying themselves unduly generously in salaries or other perks.
Then there are other things that I mentioned above, such as the gambling issue. Oftentimes, desperation will lead people to feel stealing inheritance from family members is okay.
Use of professional fiduciaries
A professional fiduciary is one of the more valuable and underutilized tools in estate planning. For the most part, many families would rather not pay a third party to manage their finances in the event of death or incapacity. They would rather lean on their children or other family members if possible. And in fact, family members would rather do this as well. That is what family does, they step up when there are problems, right?
Professional fiduciaries can sometimes solve significant problems. Much of this has to do with uncertainty. Time will change facts when it comes to your family and the circumstances of it’s members.
I am not going to pretend that time does not affect professional fiduciaries or that these people are never going to be stealing anyone’s inheritance, the same as family members stealing inheritance. What I can say though, is that unlike family members, professional fiduciaries tend to be professionally licensed, bonded and insured. Many have billions in assets (though some are mom and pop operations that are still bonded and insured). Think of this as a bank. Bank employees steal from the banks they work at all the time. You know this. And yet, we all keep putting our money in the bank. We know the money is insured.
Another advantage is family unity. Someone upset with a Trustee over something is upset at an outsider, not a brother or sister. The family members can oversee the Trustee’s operations and make sure the Trustee is doing a comprehensive and professional job. It’s awkward and uncomfortable to look over the shoulder of a family member Trustee. Most people won’t do it. Before anyone notices the money is gone, it would be too late.
A Blessing, But We Still Have People
The Islamic Rules of Inheritance is a blessing from Allah. It makes life easier for families because of uniformity when it comes to shares of inheritance that are not based on your vanity and how you think things should be.
However, this does not stop Muslims from stealing inheritance from their family. Not much in the world happens without trust and you should trust people that have earned it. One thing you should not do though, especially in your Islamic Estate Planning, is trust that everything will always be the same. It won’t.
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