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You are here: Home / Uncategorized / What is an Islamic Trust?

What is an Islamic Trust?

June 6, 2024 By Ahmed Shaikh

Islamic Trust

When someone uses the term “Islamic Trust,” it could mean one of several things.  However it usually just means a trust where hopefully nothing haram (prohibited in Islam) is going on.  A “trust” is a relationship; it is not a piece of paper, though often a byproduct of that relationship is pieces of paper.  

Example: 

Abdullah travels to Africa for three months. He then asks his best friend, Haroon, to take care of his pet anaconda, Isabella. They write nothing down, but  Abdullah and Haroon have nevertheless created a trust.  

 

This basic concept leads us to use trusts with an Islamic Estate Planning Attorney. Trusts are never oral, but the idea of having your affairs managed in the event of death, incapacity, or for other purposes is the same. An “Islamic Trust” can be used for a few different purposes. 

Implementing the Islamic Rules of Inheritance

 

Islamic Inheritance is fard for Muslims. I have a comprehensive article you can read about here. However, a trust as part of an individual’s Islamic Estate Planning includes a “living trust,” a will, a power of attorney (for incapacity planning), and other documents. 

Waqf

A Waqf is a trust, but the context of the term and its use is far different from planning for Inheritance.  Contrary to popular belief, a “waqf” is not the same as charity. A masjid or a school can be a waqf, but many Masjid and school founders did not organize it that way.  A waqf has a perpetual existence.  However, it may be for the benefit of a family, the Muslim community, the community at large, or animals (like a nature preserve).  Of course, like anything else, the thing that makes it “Islamic” is that it is not prohibited in Islam and is hopefully beneficial.  

Charitable Trusts

A charitable trust is not necessarily a waqf.  There are a variety of such trusts, including charitable remainder trusts, charitable lead trusts, and other trusts with philanthropic components.  An Attorney who is an expert in Islamic Estate Planning would need to structure such trusts so they don’t violate various Islamic rules.  Learn more about it here. 

Other purposes

Trusts are contracts. As such, they can be used for a wide range of purposes.  For example, including business succession, public benefits planning, asset protection, tax planning, and more.  

If you need an Islamic Estate Planning attorney to help you form an Islamic Trust, whatever form that may take, you can schedule a 15-minute no-obligation Zoom call here.  

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