What Does Islamic Inheritance Entail?

Hello there, I hope it's been a great 2021 for those of you who are reading and I hope that you'll be able to usher in a good 2022 which is just 2 days away!

What you're about to read pertains to Islamic Inheritance. As we all know well enough that inheritance on its own is an extremely touchy subject, but when we add "Islamic" in front of "Inheritance" it throws in a lot more factors into the mix. So, I'll try my best to make it as simple and understandable as possible for you. I myself am a Muslim and had to scour the internet quite a fair bit to come up with this and my hope in writing this is that I start a sort of conversation in the finance space vis-a-vis Islamic Inheritance as there's very little on it in the finance space.

Disclaimer: I am not a lawyer, a law student nor the most devout Muslim and as such if there's any feedback on this piece, I'd welcome all of it.

What is Islamic Inheritance?

Islamic Inheritance, or as it is termed, Faraidh, is known as the Islamic Law on Inheritance. It deals with the distribution of a Muslim individual upon death, in accordance with the Quran, the Hadith and the Ulema. Faraidh in Arabic means "fixed portions" and ideally indicates equity among the heirs or beneficiaries of said Muslim individual.

Muslim Inheritance has the full force of the law as stated in the Administration of Muslim Law Act (Chapter VII for Property), hence if you're a Muslim, you will have to abide by these laws.

The basis of Faraidh follows the Quran and is stated in Surah An-Nisaa verse 11 and 12, on how an estate should be distributed. In fact, verse 11 ends off with "you know not which of them (parents or children) are nearest to you in benefit.", indicating that Faraidh takes into account that people can be two-faced and blindside you in order to get your inheritance money.

We move on to the Hadith which says that the portions must be given to those entitled to them and the remainder "is for the nearest male.", which I would assume would be a male of your blood relation. Finally, the Ulema usually come to a consensus on the nitty-gritty details that are not expressly stated in either the Quran or in the Hadiths.

Who is Eligible?

There are a few groups of people who can be looked at with respect to Faraidh. These namely are Quranic heir, residual beneficiaries and non-Faraidh beneficiaries. The Quranic heirs are made up of mostly women, such as an individual's mother to daughter's of various kinsmen, with an individual's husband, grandfather and uterine brother (Step-brother if I'm not wrong) being the only males in the Quranic heirs portion. Then comes residual beneficiaries which include people like sons, father, brothers and uncles.

Then comes the portion for non-Faraidh beneficiaries, which include people who are not in the above 2 groups and non-Muslims. The caveat to this is that in a Muslim will, only 1/3 of an individual's estate can be willed to non-Faraidh beneficiaries. An example of this is if a Muslim gets a Registry of Marriages (ROM) certificate with a non-Muslim spouse instead of a Registry of Muslim Marriages (ROMM) certificate, then said spouse will not be considered under Faraidh and can only be a beneficiary under the non-Faraidh portion.

Types of Assets Under Faraidh Jurisdiction

The assets include, but are likely not limited to, CPF funds, investments (stocks, bonds, etc), insurance, property, vehicles, bank savings, jewellery and cash.

That is to note that for your CPF, you can nominate anyone, including non-Faraidh beneficiaries as it is seen as a gift during your lifetime rather than your will.

Another one to note is your flat co-ownership, whereby there is a right of survivorship, meaning that whoever co-owns a flat with a Muslim and upon their demise, will own the flat, regardless of their rights to Faraidh or not.

Tools for Faraidh Distribution

There are a few tools that a Muslim can use to give money to the beneficiaries of their choice. These are, but again are not limited to, wills (Wasiat), gifts (Hibah), charitable donations (Wakaf & Sadaqah), vows (Nuzriah) and Baitulmal.

Wills are legal documents signed during a person's lifetime for how they want their assets to be distributed and can name the executor of a will. However, for a will to be valid, it has to be witnessed by 2 males who are 21 years old and above and of sound mind. It has to follow Islamic law, can not omit lawful Faraidh beneficiaries from the Estate and a maximum of a third can be given to non-Faraidh beneficiaries. Failure to comply could result in the annulation of the will.

Next up are gifts, charitable donations and vows. Gifts can be given to anyone so long as the Muslim individual is alive and need not follow Faraidh, so for example, a Muslim can give $10,000 to a non-Muslim before he dies. For charitable donations, the amount varies as to how much can be given to a charity or organisation. Finally, for vows, they are written agreements with 2 male witnesses and are effected 2 days before death.

Baitulmal is the institution that acts as a trustee for Muslims and only comes into play when 1 of the 4 conditions:

1) When there is no rightful beneficiary to the estate.

2) All beneficiaries have received their shares and there are leftovers.

3) There is no claimant to the estate.

4) The deceased person has no beneficiary or heir.

Final Words

Once again, I am not a lawyer but simply just a Muslim trying to understand Muslim Inheritance law better in order to know how I can apply it to my life and who I can look for.

I would be doing you a disservice if I don't tell you to consult a lawyer with regards to this matter, and this applies to Inheritance Law, be it Muslim or Intestate.

For my fellow Muslims, I hope this helps your understanding of Faraidh and for my non-Muslim readers, I hope this was a piece you enjoyed reading. Do comment your thoughts down below and have a happy new year!