Islamic Estate Planning is the process of anticipating and planning for the management and disposal of a Muslim’s estate during his lifetime and after his death. It is the act(s) carried out or put in place by a person of Islamic faith to ensure the continuous management of their assets and provide for their loved ones in the event of their inevitable death. Flowing from this definition, it can be construed that Islamic Estate planning does not necessarily mean making provisions for after death alone as there are mechanisms for Estate planning during the lifetime of the Testator or Settlor such Gifting (Hibah) an asset to a beneficiary or creating a Trust (Waqf).
Basis for Islamic Estate Planning
There are several reasons for individuals of Islamic faith to undertake estate planning process. These are :
1. It is a divine Injunction
A major Islamic Estate Planning mechanism is known as Faraid. This is the Estate planning model which is expressly provided for in the glorious Qur’an and which must be strictly complied with by all individuals of Islamic faith. Perhaps, this compulsory nature of Faraid is the reason why some Nigerian Islamic scholars posit that ‘inheritance’ as a subject matter in Islam should not be classified under Islamic Personal law in the Constitution of the Federal Republic of Nigeria (1999) as amended. Largely because the concept of ‘Islamic Personal law’ suggests that a Muslim has a freewill to determine if they wish to be bound by it or not and since it has been established that Faraid is incumbent on every living Muslim, then that classification may be justifiably faulted.
2. It is a means to ensure continual provision for loved ones
One of the major concerns of an Individual, especially as he/she approaches the end of life, is the sustainability of the lifestyle of his family members. Islamic Estate planning ensures that no one in the immediate family members are left un-catered for.
3. It is a means to stifle the possibilities of a rift amongst the family members
Proper Estate planning has always proven to be a good means of avoiding disputes amongst members of a family.This is because some Islamic Estate Planning tools already provide for the specific share of some members of the family.
4. Islamic Estate planning allows for Philanthropic dispositions
Waqf is a veritable tool in Islamic Estate Planning that allows a Testator to set up a charitable structure for the benefit of certain class of beneficiaries or the public. It is a model that entails donating a property i.e., a plot of land, cash, businesses etc. for religious or charitable purposes with no intention of reclaiming same in the future. This model, overtime, has been established to be a genuine tool for the provision of financial support, and infrastructural development across all sectors i.e., educational, health, etc., in the world at large.
5. It facilitates the ability to gift an asset to an individual who is not contemplated within the Faraid provisions
It is possible that a Testator may want to make provisions for certain individuals who ordinarily cannot inherit him/her according to the Faraid provisions, for example, an adopted child. The Testator is only able to do that through executing an Islamic Will, (Wasiyah).
Best Practices for Islamic Estate Planning
Based on the foregoing, it is evident that Planning one’s Estate as a Muslim is a matter of necessity and not a luxury and this is owing to the numerous benefits it holds for the Testator, the Heirs and the Community/Ummah at large. I’m this vein, there are some best practices that should be noted and observed when embarking on the profitable journey of Estate Planning as a Muslim. These practices include:
1. Prioritizing Islamic Estate Planning
There is a notable tradition of the Holy Prophet (S.A.W) that relates that a Muslim should not pass two nights without executing a Will. This tradition can be best appreciated, especially in these contemporary times where everything is fast paced, and the world is evolving at an exponential rate. Estate planning should be undertaken as early as possible, particularly when the Testator has financial commitments in the form of loans/financing or when he has acquired so many assets that he is almost unable to keep track of them.
2. Undertaking an Inventory of all the Assets
It is a no-brainer that a Testator should undertake an holistic inventory of all his assets (onshore & offshore) and properly document them. This will facilitate his Estate plan and assist the Executors or Administrators in discharging their duties.
3. Proper listing of all Family members and Beneficiaries of the Estate
It is a good practice for a Testator to generate a comprehensive list of all persons capable of inheriting through him, including Legal heirs, Agnatic and Residuary heirs.
4. Executing a valid Islamic Will
It is permissible for a Testator to execute a valid Will for the purpose of Islamic Estate Planning, however, this permissibility is only restricted to One-Third (1/3) of his entire Estates. This model is usually preferred by most Testators, as mentioned earlier, because it allows for having a say in the way and manner one’s Estates is being administered. Making a Will allows A Testator to make testamentary declarations such as appointing an Executor who administers his Estates after his demise; making adequate provisions for his burial and the repayment of his loans, if any.
5. Being of Sound Health and Mind
It is also good practice to embark on the process of Estate planning when one is physically and mentally fit and capable and not under any duress or anxiety as this would guarantee an efficient and functional Islamic Estates Plan.
It is common knowledge that Estate Planning is not foremost in the minds of many individuals. Many people are mostly concerned, solely, about the acquisition of wealth, they are not usually bothered about planning for what happens to them and their assets when they become weak or are no longer around.
For Muslims, Islamic estate planning is crucially needed to ensure a smooth distribution of wealth amongst heirs and loved ones. More importantly, it also serves as re-distribution of wealth amongst the Muslim Ummah and facilitates societal transformation due to its charitable component. It is believed that if most of the Muslim population, if not all, across the globe, embark on this gratifying process, it would assure a satisfying life for the Testator and an egalitarian society would be achieved.
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- Developing best practices of Islamic estate planning: a construction based on the perspectives of individuals and estate planning providers
- Norazlina Abd. Wahab, Selamah Maamor, Zairy Zainol, Suraiya Hashim, Kamarul Azman Mustapha Kamal ISRA International Journal of Islamic Finance ISSN: 2289-4365 Open Access. Article publication date: 15 June 2021 Issue publication date: 30 September 2021
Wikipedia – Definition of Estate Planning. READ HERE